Placental mesenchymal stem cells (PMSCs) are multipotent cells that can differentiate in vitro to multiple lineages, including bone. Insulin-like growth factors (IGFs, IGF-1 and IGF-2) participate in maintaining growth, survival, and differentiation of many stem cells, including osteoprogenitors. Low oxygen tension (PO2) can maintain stem cell multipotency and impede osteogenic differentiation. In this study, we investigated whether PMSC osteogenic differentiation is influenced by low PO2 and by IGFs. Our results indicated that low PO2 decreased osteogenic markers RUNX2 and OPN; however, re-exposure to higher oxygen tension (room air) restored differentiation. IGFs, especially IGF-1, triggered an earlier expression of RUNX2 and enhanced OPN and mineralization. RUNX2 was phosphorylated in room air and augmented by IGFs. IGF-1 receptor (IGF-1R) was increased in low PO2 and reduced by IGFs, while insulin receptor (IR) was increased in differentiating PMSCs and enhanced by IGF-1. Low PO2 and IGFs maintained higher IR-A which was switched to IR-B in room air. PI3K/AKT was required for osteogenic differentiation, while MEK/ERK was required to repress an RUNX2 and OPN increase in low PO2. Therefore, IGFs, specifically IGF-1, trigger the earlier onset of osteogenic differentiation in room air, whereas, reversibly, low PO2 impedes complete differentiation by maintaining higher multipotency and lower differentiation markers.