The identification of the molecular mechanisms controlling the degradation of regulatory proteins in mesenchymal stromal cells (MSC) may provide clues to promote MSC osteogenic differentiation and bone regeneration. Ubiquitin ligase-dependent degradation of proteins is an important process governing cell fate. In this study, we investigated the role of the E3 ubiquitin ligase c-Cbl in MSC osteoblast differentiation and identified the mechanisms involved in this effect. Using distinct shRNA targeting c-Cbl, we showed that c-Cbl silencing promotes osteoblast differentiation in murine and human MSC, as demonstrated by increased alkaline phosphatase activity, expression of phenotypic osteoblast marker genes (RUNX2, ALP, type 1 collagen), and matrix mineralization in vitro. Coimmunoprecipitation analyses showed that c-Cbl interacts with the transcription factor STAT5, and that STAT5 forms a complex with RUNX2, a master transcription factor controlling osteoblastogenesis. Silencing c-Cbl decreased c-Cblmediated STAT5 ubiquitination, increased STAT5 protein level and phosphorylation, and enhanced STAT5 and RUNX2 transcriptional activity. The expression of insulin like growth factor-1 (IGF-1), a target gene of STAT5, was increased by c-Cbl silencing in MSC and in bone marrow stromal cells isolated from c-Cbl deficient mice, suggesting that IGF-1 contributes to osteoblast differentiation induced by c-Cbl silencing in MSC. Consistent with these findings, pharmacological inhibition of STAT5 activity, or neutralization of IGF-1 activity, abrogated the positive effect of c-Cbl knockdown on MSC osteogenic differentiation. Taken together, the data provide a novel functional mechanism by which the ubiquitin ligase c-Cbl regulates the osteoblastic differentiation program in mesenchymal cells by controlling Cbl-mediated STAT5 degradation and activity.