Mesenchymal stem cells are essential for repair of bone and other supporting tissues. Bone morphogenetic proteins (BMPs) promote commitment of these progenitors toward an osteoblast fate via functional interactions with osteogenic transcription factors, including Dlx3, Dlx5, and Runx2, and also can direct their differentiation into bone-forming cells. BMP-2-stimulated osteoblast differentiation additionally requires continual signaling from insulin-like growth factor (IGF)-activated pathways. Here we identify Akt2 as a critical mediator of IGF-regulated osteogenesis. Targeted knockdown of Akt2 in mouse primary bone marrow stromal cells or in a mesenchymal stem cell line, or genetic knockout of Akt2, did not interfere with BMP-2-mediated signaling but resulted in inhibition of osteoblast differentiation at an early step that preceded production of Runx2. In contrast, Akt1-deficient cells differentiated normally. Complete biochemical and morphological osteoblast differentiation was restored in cells lacking Akt2 by adenoviral delivery of Runx2 or by a recombinant lentivirus encoding wild-type Akt2. In contrast, lentiviral Akt1 was ineffective. Taken together, these observations define a specific role for Akt2 as a gatekeeper of osteogenic differentiation through regulation of Runx2 gene expression and indicate that the closely related Akt1 and Akt2 exert distinct effects on the differentiation of mesenchymal precursors.