Skeletal injuries are among the most prevalent clinical problems and bone marrow-derived mesenchymal stem/stromal cells (BMSCs) have successfully been used for the treatment thereof. Stromal cell-derived factor-1 (SDF-1; CXCL12) is a member of the CXC chemokine family with multiple splice variants. The two most abundant variants, SDF-1α and SDF-1β, share identical amino acid sequences, except for four additional amino acids at the C-terminus of SDF-1β, which may mediate surface stabilization via glycosaminoglycans and protect SDF-1β from proteolytic cleavage, rendering it twice as potent as SDF-1α. Increasing evidence suggests that SDF-1 is involved in bone formation through regulation of recruitment, engraftment, proliferation, and differentiation of stem/progenitor cells. The underlying molecular mechanisms, however, have not yet been fully elucidated. In this study, we tested the hypothesis that SDF-1β can potentiate bone morphogenetic protein-2 (BMP-2)-stimulated osteogenic differentiation and chemotaxis of BMSCs in vitro. Utilizing retrovirus-mediated gene transfer to generate novel Tet-Off-SDF-1β BMSCs, we found that conditional SDF-1β expression is tightly regulated by doxycycline in a dose-dependent and temporal fashion, leading to significantly increased SDF-1β mRNA and protein levels. In addition, SDF-1β was found to enhance BMP-2-stimulated mineralization, mRNA and protein expression of key osteogenic markers, and regulate BMP-2 signal transduction via extracellular signal-regulated kinases 1/2 (Erk1/2) phosphorylation in genetically engineered BMSCs in vitro. We also showed that SDF-1β promotes the migratory response of CXC chemokine receptor 4 (CXCR4)-expressing BMSCs in vitro. Taken together, these data support that SDF-1β can play an important role in BMP-2-stimulated osteogenic differentiation of BMSCs and may exert its biological activity in both an autocrine and paracrine fashion.