With rapidly ageing populations worldwide, the incidence of osteoporosis has reached epidemic proportions. Reactive oxygen species (ROS), a by‐product of oxidative stress and ageing, has been thought to induce osteoporosis by inhibiting osteogenic differentiation of mesenchymal stem cells (MSCs). However, specific mechanisms of how ROS results in alterations on MSC differentiation capacity have been inconsistently reported. We found that H₂O₂, an ROS, simultaneously induced MSC lineage commitment towards adipogenesis and away from osteogenesis at the functional as well as transcriptional level. In addition, H₂O₂ decreased the activities of SIRT1, a histone deacetylase and longevity gene. By silencing and reconstituting SIRT1 in MSCs, we demonstrated that H₂O₂ exerted its disparate effects on adipogenic/osteoblastic lineage commitment mainly through modulating SIRT1 expression levels. Treatment with resveratrol, a SIRT1 agonist, can also reverse this ROS‐induced adipogenesis/osteogenesis lineage imbalance. Moreover, SIRT1 regulation of RUNX2 transcriptional activity was mediated through deacetylation of the ROS‐sensitive transcription factor FOXO3a. Taken together, our data implicate SIRT1 as playing a vital role in ROS‐directed lineage commitment of MSCs by modulating two lineages simultaneously. Our findings on the critical role of SIRT1 in ROS/age‐related perturbations of MSC differentiation capacity highlight this molecule as a target for maintenance of MSC stemness as well as a potential anabolic target in osteoporosis.