Mesenchymal precursor cells have the potential to differentiate into several cell types, including adipocytes and osteoblasts. Activation of Wnt/beta-catenin signaling shifts mesenchymal cell fate toward osteoblastogenesis at the expense of adipogenesis; however, molecular mechanisms by which Wnt signaling alters mesenchymal cell fate have not been fully investigated. Our prior work indicates that multipotent precursors express adipogenic and osteoblastogenic transcription factors at physiological levels and that ectopic expression of Wnt10b in bipotential ST2 cells suppresses expression of CCAAT/enhancer-binding protein alpha (C/EBPalpha) and peroxisome proliferator-activated receptor gamma (PPARgamma) and increases expression of Runx2, Dlx5, and osterix. Here, we demonstrate that transient activation of Wnt/beta-catenin signaling rapidly suppresses C/EBPalpha and PPARgamma, followed by activation of osteoblastogenic transcription factors. Enforced expression of C/EBPalpha or PPARgamma partially rescues lipid accumulation and decreases mineralization in ST2 cells expressing Wnt10b, suggesting that suppression of C/EBPalpha and PPARgamma is required for Wnt/beta-catenin to alter cell fate. Furthermore, knocking down expression of C/EBPalpha, PPARgamma, or both greatly reduces adipogenic potential and causes spontaneous osteoblastogenesis in ST2 cells and mouse embryonic fibroblasts, suggesting that Wnt signaling alters the fate of mesenchymal precursor cells primarily by suppressing C/EBPalpha and PPARgamma.