Background: Hypoxia in the vicinity of bone defects triggers the osteogenic differentiation of precursor cells and promotes healing. The activation of STAT3 signaling in mesenchymal stem cells (MSCs) has similarly been reported to mediate bone regeneration. However, the interaction between hypoxia and STAT3 signaling in the osteogenic differentiation of precursor cells during bone defect healing is still unknown.Methods: In this study, we assessed the impact of different durations of CoCl₂-induced cellular hypoxia on the osteogenic differentiation of MSCs. Role of STAT3 signaling on hypoxia induced osteogenic differentiation was analyzed both in vitro and in vivo. The interaction between cellular hypoxia and STAT3 signaling in vivo was investigated in a mouse femoral bone defect model.Results: The peak osteogenic differentiation and expression of vascular endothelial growth factor (VEGF) occurred after 3 days of hypoxia. Inhibiting STAT3 reversed this effect. Hypoxia enhanced the expression of hypoxia-inducible factor 1-alpha (HIF-1α) and STAT3 phosphorylation in MSCs. Histology and μ-CT results showed that CoCl₂treatment enhanced bone defect healing. Inhibiting STAT3 reduced this effect. Immunohistochemistry results showed that CoCl₂treatment enhanced Hif-1α, ALP and pSTAT3 expression in cells present in the bone defect area and that inhibiting STAT3 reduced this effect.Conclusions: The in vitro study revealed that the duration of hypoxia is crucial for osteogenic differentiation of precursor cells. The results from both the in vitro and in vivo studies show the role of STAT3 signaling in hypoxia-induced osteogenic differentiation of precursor cells and bone defect healing.