MicroRNAs are novel key regulators of cellular differentiation. Dlx transcription factors play an important role in osteoblast differentiation, and Dlx5 and Dlx2 are known targets of miR-124. Therefore, in the present study, we investigated the regulatory effects of miR-124 on the osteogenic differentiation and in vivo bone formation of mesenchymal stem cells (MSCs). During osteogenic induction by BMP2, the expression levels of miR-124 were inversely correlated with those of osteogenic differentiation marker genes in human and mouse bone marrow-derived MSCs, MC3T3-E1 cells and C2C12 cells. The overexpression of a miR-124 mimic significantly decreased the expression levels of Dlx5, Dlx3, and Dlx2, whereas the silencing of miR-124 with hairpin inhibitors significantly increased the expression of these Dlx genes. Luciferase reporter assays demonstrated that miR-124 directly targets the 3'UTRs of Dlx3, Dlx5, and Dlx2. The overexpression of a miR-124 mimic suppressed the osteogenic marker gene expression levels, alkaline phosphatase activity and matrix mineralization, which were all significantly increased by the overexpression of a miR-124 inhibitor. When ectopic bone formation was induced by the subcutaneous transplantation of human bone marrow-derived MSCs in nude mice, MSCs overexpressing a miR-124 inhibitor significantly enhanced woven bone formation compared with control MSCs. However, MSCs overexpressing a miR-124 mimic exhibited increased adipocyte differentiation at the expense of ectopic bone formation. These results suggest that miR-124 is a negative regulator of osteogenic differentiation and in vivo bone formation and that the targeting of Dlx5, Dlx3, and Dlx2 genes partly contributes to this inhibitory effect exerted by miR-124.