Deubiquitinase MYSM1 has been shown to play a critical role in hematopoietic cell differentiation and hematopoietic stem cell (HSC) maintenance. Mesenchymal stem cells (MSCs) are multipotent stromal cells within the bone marrow. MSCs are progenitors to osteoblasts, chondrocytes, adipocytes, and myocytes. Although, MSCs have been extensively studied, the roles of MYSM1 in these cells remain unclear. Here we describe the function of MYSM1 on MSC maintenance and differentiation. In this report, we found that Mysm1-/- mice had a lower bone mass both in long bone and calvaria compared with their control counterpart. Preosteoblasts from Mysm1-/- mice did not show changes in proliferation or osteogenesis when compared to WT mice. Conversely, Mysm1-/- MSCs showed enhanced autonomous differentiation and accelerated adipogenesis. Our results demonstrate that MYSM1 plays a critical role in MSC maintenance and differentiation. This study also underscores the biological significance of deubiquitinase activity in MSC function. Mysm1 may represent a potential therapeutic target for controlling MSC lineage differentiation, and possibly for the treatment of metabolic bone diseases such as osteoporosis.