Osteoblasts and chondrocytes, which derive from a common mesenchymal precursor (osteochondroprogenitor), are involved in bone formation and remodeling in vivo. Determination of osteochondroprogenitor fate is under the control of complex hormonal and local factors converging onto a series of temporospatial dependent transcription regulators. Sox9, together with L-Sox5 and Sox6, of the Sox family is required for chondrogenic differentiation commitment, while Runx2/Cbfa1, a member of runt family and Osterix/Osx, a novel zinc finger-containing transcription factor play a pivotal role in osteoblast differentiation decision and hypertrophic chondrocyte maturation. Recent in vitro and in vivo evidence suggests β-catenin, a transcriptional activator in the canonical Wnt pathway, can act as a determinant factor for controlling chondrocyte and osteoblast differentiation. Here we focus on several intensively studied transcription factors and Wnt/β-catenin signal molecules to illustrate the regulatory mechanism in directing commitment between osteoblast and chondrocyte, which will eventually allow us to properly manipulate the mesenchymal progenitor cell differentiation on bone and regeneration of cartilage tissue engineering.