Abstract Background A high incidence of decreased bone mineral density (BMD) has been associated with HIV infection. Normal skeletal homeostasis is controlled, at least in part, by the maturation and activity of mature osteoblasts. Previous studies by our group have demonstrated the ability of HIV proteins to perturb osteoblast function, and the degree of osteogenesis in differentiating mesenchymal stem cells (MSCs). This study attempts to further dissect the dynamics of this effect. Methods MSCs were cultured under both osteogenic (cultured in commercially available differentiation media) and quiescent (cultured in basal medium) conditions. Both cell populations were exposed to HIV p55-gag and HIV rev (100 ng/ml). Time points were taken at 3, 6, 9, and 15 days for osteogenic conditions, while quiescent cells were treated for 1 week. Cell function (alkaline phosphatase [ALP] activity, calcium deposition, and lipid levels) and the activity of the key MSC transcription factors, RUNX-2 and PPARgamma were determined post-exposure. Also, in cells cultured in differentiating conditions, cellular levels of connective tissue growth factor (CTGF) were analysed using whole cell ELISA, while BMP-2 secretion was also examined. Results In differentiating MSCs, exposure to HIV proteins caused significant changes in both the timing and magnitude of key osteogenic events and signals. Treatment with REV increased the overall rate of mineralization, and induced earlier increases in CTGF levels, RUNX-2 activity and BMP-2 secretion, than those observed in the normal course of differntiation. In contrast, p55-gag reduced the overall level of osteogenesis, and reduced BMP-2 secretion, RUNX-2 activity, CTGF levels and ALP activity at many of the timepoints examined. Finally, in cells cultured in basal conditions, treatment with HIV proteins did not in and of itself induce a significant degree of differentiation over the time period examined. Conclusion These data demonstrate that the effect of HIV proteins on bone is dependent on the differentiation status of the cells that they are in contact with. The effect on bone cell signalling provides insights into the mechanism of HIV induced decreases in bone mineral density.