Uremic toxins cause bone disorders in patients with chronic kidney disease (CKD). These disorders are characterized by low turnover osteodystrophy and impaired bone formation in the early stages of CKD. Evidence indicates that the aryl hydrocarbon receptor (AhR) mediates signals that suppress early osteogenic differentiation in bone marrow mesenchymal stem cells (BMSCs). However, whether the AhR mediates the effects of indoxyl sulfate (IS), a uremic toxin, on BMSC osteogenesis remains unclear. We investigated whether IS affects osteogenesis through the AhR/Hes1 pathway. Expression levels of osteogenesis genes (Runx2, Bmp2, Alp, and Oc), AhR, and Hes1 were measured in mouse BMSCs (D1 cells). At concentrations of 2–50 μM, IS significantly reduced mineralization, particularly in the early stages of BMSC osteogenesis. Furthermore, IS significantly downregulated the expression of Runx2, Bmp2, Oc, and Alp. Notably, this downregulation could be prevented using an AhR antagonist and through Ahr knockdown. Mechanistically, IS induced the expression of Hes1 through AhR signaling, thereby suppressing the transcription of Runx2 and Bmp2. Our findings suggest that IS inhibits early osteogenesis of BMSCs through the AhR/Hes1 pathway, thus suppressing the transcription of Runx2 and Bmp2. Our findings may guide new therapeutic strategies against CKD-related bone disorders.