Bone marrow adipogenesis is a normal physiologic process in all mammals. However, its function is unknown. The mesenchymal stem cell is the marrow precursor for adipocytes as well as osteoblasts, and PPARG is an essential differentiation factor for entrance into the fat lineage. Mouse models have provided significant insight into the molecular cues that define stromal cell fate. In humans, accelerated marrow adipogenesis has been associated with aging and several chronic conditions, including diabetes mellitus and osteoporosis. Newer imaging techniques have been used to determine the developmental time course of fat generation in bone marrow. However, more studies are needed to understand the interrelationship among hematopoietic, osteoblastic, and adipogenic cells within the marrow niche.