The Rb and Pten tumor suppressor genes are important regulators of bone development and both are frequently mutated in the bone cancer osteosarcoma (OS). To determine if Rb1 and Pten synergize as tumor suppressor genes for osteosarcoma, we co-deleted them in osteo-progenitor cells. Surprisingly, we observed rapid development of adipogenic but not osteosarcoma tumors in the ΔRb1/Pten mice. ΔPten solo deleted mice also developed lipoma tumors but at a much reduced frequency and later onset than those co-deleted for Rb1. Pten deletion also led to a marked increase in adipocytes in the bone marrow. To better understand the function of Pten in bone development in vivo, we conditionally deleted Pten in OSX+ osteoprogenitor cells using OSX-Cre mice. μCT analysis revealed a significant thickening of the calvaria and an increase in trabeculae volume and number in the femur, consistent with increased bone formation in these mice. To determine if Pten and Rb1 deletion actively promotes adipogenic differentiation, we isolated calvarial cells from Ptenfl/fl and Ptenfl/fl; Rb1fl/fl mice, infected them with CRE or GFP expressing adenovirus, treated with differentiation media. We observed slightly increased adipogenic, and osteogenic differentiation in the ΔPten cells. Both phenotypes were greatly increased upon Rb1/Pten co-deletion. This was accompanied by an increase in expression of genes required for adipogenesis. These data indicate that Pten deletion in osteoblast precursors is sufficient to promote frequent adipogenic, but only rare osteogenic tumors. Rb1 hetero- or homo-zygous co-deletion greatly increases the incidence and the rapidity of onset of adipogenic tumors, again, with only rare osteosarcoma tumors.