We have shown that an altered tissue redox environment in mice lacking either murine beta Hemoglobin major (Hgbβ _ma KO) or minor (Hgbβ _mi KO) regulates inflammation. The REDOX environment in marrow stem cell niches also control differentiation pathways. We investigated osteoclastogenesis (OC)/osteoblastogenesis (OB), in bone cultures derived from untreated or FSLE-treated WT, Hgbβ _ma KO or Hgbβ _mi KO mice. Marrow mesenchymal cells from 10d pre-cultures were incubated on an osteogenic matrix for 21d prior to analysis of inflammatory cytokine release into culture supernatants, and relative OC:OB using (TRAP:BSP, RANKL:OPG) mRNA expression ratios and TRAP or Von Kossa staining. Cells from WT and Hgbβ _ma KO mice show decreased IL-1β,TNFα and IL-6 production and enhanced osteoblastogenesis with altered mRNA expression ratios and increased bone nodules (Von Kossa staining) in vitro after in vivo stimulation of mRNA expression of fetal Hgb genes (Hgbε and Hgbβ _mi ) by a fetal liver extract (FSLE). Marrow from Hgbβ _mi KO showed enhanced cytokine release and preferential enhanced osteoclastogenesis relative to similar cells from WT or Hgbβ _ma KO mice, with no increased osteoblastogenesis after mouse treatment with FSLE. Pre-treatment of WT or Hgbβ _ma KO, but not Hgbβ _mi KO mice, with other molecules (rapamycin; hydroxyurea) which increase expression of fetal Hgb genes also augmented osteoblastogenesis and decreased cytokine production in cells differentiating in vitro. Infusion of rabbit anti- Hgbε or anti- Hgbβ _mi , but not anti-Hgbα or anti- Hgbβ _ma into WT mice from day 13 gestation for 3 weeks led to attenuated osteoblastogenesis in cultured cells. We conclude that increased fetal hemoglobin expression, or use of agents which improve fetal hemoglobin expression, increases osteoblast bone differentiation in association with decreased inflammatory cytokine release.