We previously reported that specific oxysterols stimulate osteogenic differentiation of pluripotent bone marrow stromal cells (MSCs) through activation of hedgehog (Hh) signaling and may serve as potential future therapies for intervention in osteopenia and osteoporosis. In this study we report that the osteogenic oxysterol 20(S)-hydroxycholesterol (20S) induces the expression of genes associated with Notch signaling. Using M2-10B4 (M2) MSCs, we found that 20S significantly induced HES-1, HEY-1, and HEY-2 mRNA expression compared with untreated cells, with maximal induction after 48 hours, whereas the nonosteogenic oxysterols did not. Similar observations were made when M2 cells were treated with sonic hedgehog (Shh), and the specific Hh pathway inhibitor cyclopamine blocked 20S-induced Notch target gene expression. 20S did not induce Notch target genes in Smo(-/-) mouse embryonic fibroblasts, further confirming the role of Hh signaling in 20S-induced expression of Notch target genes. Despite the inability of liver X-receptor (LXR) synthetic ligand TO901317 to induce Notch target genes in M2 cells, LXR knockdown studies using siRNA showed inhibition of 20S-induced HEY-1 but not HES-1 expression, suggesting the partial role of LXR signaling in MSC responses to 20S. Moreover, 20S-induced Notch target gene expression was independent of canonical Notch signaling because neither 20S nor Shh induced CBF1 luciferase reporter activity or NICD protein accumulation in the nucleus, which are hallmarks of canonical Notch signaling activation. Finally, HES-1 and HEY-1 siRNA transfection significantly inhibited 20S-induced osteogenic genes, suggesting that the pro-osteogenic effects of 20S are regulated in part by HES-1 and HEY-1.