Human mesenchymal stem cells (hMSCs) have the capacity to differentiate along several pathways to form bone, cartilage, tendon, muscle, and adipose tissues. The adult hMSCs reside in vivo in the bone marrow in niches where oxygen concentration is far below the ambient air, which is the most commonly encountered laboratory condition. The study reported here was designed to determine whether oxygen has a role in the differentiation of hMSCs into adipocytes. Indeed, when exposed to atmosphere containing only 1% of oxygen, the formation of adipocyte-like phenotype with cytoplasmic lipid inclusions was observed. The effect of hypoxia on the expression of adipocyte-specific genes was determined by real-time reverse transcription polymerase chain reaction. Interestingly, neither of the two central regulators of adipogenesis--the transcription factors peroxisome proliferator-activated receptor gamma2 (PPAR-gamma2) and ADD1/SREBP1c-was induced. Furthermore, hypoxia did not have any effect on the transcription of early (lipoprotein lipase) or late (aP2) marker genes. By the same token, neither of the mature adipocyte-specific genes--leptin and adipophilin--was found responsive to the treatment. High level of induction, however, was observed with the PPAR-gamma-induced angiopoietin-related gene, PGAR. The lack of an adipocyte-specific transcription pattern thus indicates that despite accumulation of the lipid, true adipogenic differentiation did not take place. In conclusion, hypoxia appears to exert a potent lipogenic effect independent of PPAR-gamma2 maturation pathway.