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The contributions of skeletal cells to the processes of B cell development in the bone marrow (BM) have not been completely described. The von-Hippel Lindau protein (VHL) plays a key role in cellular responses to hypoxia. Previous work showed that Dmp1 -Cre; Vhl conditional knockout mice ( Vhl cKO), which deletes Vhl in subsets of mesenchymal stem cells, late osteoblasts and osteocytes, display dysregulated bone growth and reduction in B cells. Here, we investigated the mechanisms underlying the B cell defects using flow cytometry and high-resolution imaging. In the Vhl cKO BM, B cell progenitors were increased in frequency and number, whereas Hardy Fractions B-F were decreased. Vhl cKO Fractions B-C cells showed increased apoptosis and quiescence. Reciprocal BM chimeras confirmed a B cell-extrinsic source of the Vhl cKO B cell defects. In support of this, Vhl cKO BM supernatant contained reduced CXCL12 and elevated EPO levels. Intravital and ex vivo imaging revealed Vhl cKO BM blood vessels with increased diameter, volume, and a diminished blood-BM barrier. Staining of Vhl cKO B cells with an intracellular hypoxic marker indicated the natural existence of distinct B cell microenvironments that differ in local oxygen tensions and that the B cell developmental defects in Vhl cKO BM are not initiated by hypoxia. Our studies identify novel mechanisms linking altered bone homeostasis with drastic BM microenvironmental changes that dysregulate B cell development.