Runx2, an essential transactivator for osteoblast differentiation, is tightly regulated at both the transcriptional and posttranslational levels. In this paper, we report that CHIP (C terminus of Hsc70-interacting protein)/STUB1 regulates Runx2 protein stability via a ubiquitination-degradation mechanism. CHIP interacts with Runx2 in vitro and in vivo. In the presence of increased Runx2 protein levels, CHIP expression decreases, whereas the expression of other E3 ligases involved in Runx2 degradation, such as Smurf1 or WWP1, remains constant or increases during osteoblast differentiation. Depletion of CHIP results in the stabilization of Runx2, enhances Runx2-mediated transcriptional activation, and promotes osteoblast differentiation in primary calvarial cells. In contrast, CHIP overexpression in preosteoblasts causes Runx2 degradation, inhibits osteoblast differentiation, and instead enhances adipogenesis. Our data suggest that negative regulation of the Runx2 protein by CHIP is critical in the commitment of precursor cells to differentiate into the osteoblast lineage.