Osteoimmunology is an emerging field of research focused on the interaction of the immune system and bone. In this study we demonstrate that human osteoblasts are sensitive to the immune cytokine interferon (IFN)beta. Osteoblasts respond to IFN beta as shown by the induction of several known IFN target genes such as interferon-induced (IFI) proteins (IFIT1, IFI44L), interferon-stimulated gene factor 3 (ISGF3) complex and the induction of IFN beta itself. We demonstrated that IFN beta has severe inhibitory effects on mineralization of osteoblast-derived extracellular matrix (ECM). Analysis of the timing of the IFN beta effects revealed that committed osteoblasts in early stage of differentiation are most sensitive to IFN beta inhibition of mineralization. A single IFN beta treatment was as effective as multiple treatments. During the progress of differentiation osteoblasts become desensitized for IFN beta. This pinpoints to a complex pattern of IFN beta sensitivity in osteoblasts. Focusing on early osteoblasts, we showed that IFN beta decreased gene expression of ECM-related genes, such as type I Collagen (COL1A1), fibronectin (FN1), fibullin (FBLN1), fibrillin (FBN2), and laminin (LAMA1). Additionally, ECM produced by IFN beta-treated osteoblasts contained less collagen protein. IFN beta stimulated gene expression of osteopontin (OPN), annexin2 (ANXA2), and hyaluronan synthase 1 (HAS1), which are important factors in the adhesion of hematopoietic stem cells (HSC) in the HSC niche. In conclusion, IFN beta directly modifies human osteoblast function by inhibiting ECM synthesis eventually resulting in delayed bone formation and mineralization and induces a HSC niche supporting phenotype. These effects are highly dependent on timing of treatment in the early phase of osteoblast differentiation. J. Cell. Physiol. 227: 26682676, 2012. (c) 2011 Wiley Periodicals, Inc.