Adipose-derived adult stem cells (ASCs), like their bone-marrow derived counterparts, possess the ability to differentiate down osteogenic, chondrogenic, adipogenic, and myogenic pathways. For bone differentiation of mouse ASCs (mASCs), retinoic-acid mediated upregulation of BMPR-IB has been found to be necessary. Interestingly, our previous work has also shown Fibroblast Growth Factor-2 (FGF-2) to strongly inhibit this osteogenic differentiation, even in the presence of retinoic acid. In this report, we investigated the molecular mechanisms underlying FGF-2 mediated osteogenic inhibition, demonstrating that addition of exogenous FGF-2 to mASCs antagonizes upregulation of BMPR-IB gene expression in response to retinoic acid. In addition, constitutive expression of BMPR-IB, but not BMPR-IA or BMPR-II, was found to counteract the inhibitory effects of FGF-2. Finally, p53(-/-) mASCs and human ASCs, both of which express high levels of endogenous BMPR-IB, underwent normal osteogenic differentiation even in the presence of FGF-2. Collectively, our data therefore indicate that FGF-2 antagonizes the response of mASCs to retinoic acid and also suggest that threshold levels of BMPR-IB may play a crucial role both in counteracting the inhibitory role of FGF-2 and in promoting osteogenic differentiation of ASCs in the absence of retinoic acid. Moreover, the present study also indicates that differences exist between mouse and human ASCs in relationship to FGF-2 activity in the osteogenic context.