The bone marrow (BM) is an essential organ for hematopoiesis in adult, in which proliferation and differentiation of hematopoietic stem/progenitor cells (HSPC) is orchestrated by various stromal cells. Alterations of BM hematopoietic environment lead to various hematopoietic disorders as exemplified by the linking of fatty marrow with increased adipogenesis to anemia or pancytopenia. Therefore, the composition of mesenchymal stromal cell (MSC)-derived cells in the BM could be crucial for proper hematopoiesis, but the mechanisms underlying the MSC differentiation for hematopoiesis remain poorly understood. In this study, we show that Oncostatin M (OSM) knock out mice exhibited pancytopenia advancing fatty marrow with age. OSM strongly inhibited adipogenesis from BM MSC in vitro, whereas it enhanced their osteogenesis but suppressed the terminal differentiation. Intriguingly, OSM allowed the MSC-derived cells to support the ex vivo expansion of HSPC effectively as feeder cells. Furthermore, the administration of OSM in lethally irradiated wild-type mice blocked fatty marrow and enhanced the recovery of HSPC number in the BM and peripheral blood cells after engraftment of HSPC. Collectively, OSM plays multiple critical roles in the maintenance and development of the hematopoietic microenvironment in the BM at a steady state as well as after injury.