There are many differences between the two largest cities in Japan.  To a foreigner they are a lot more subtle, but to Japanese the culture is like day and night.  As you may well know Japanese identify with their hometown.  They have stereotypes for both of these two locations. One is not better then the other, but there are some differences and it may help you to know them.  Here is a list of some of the differences.

Personality

In Osaka to be funny is a very attractive and likable characteristic.  They love to make the group laugh.  To be a clown is not embarrassing.  They don't mind being laughed at, because most of the time they are laughing with you.  Osaka is famous for it's comedians.  They have the famous team duo conversation comedians.  These comedians use a lot of slapstick humor and make a fool or idiot of the other.  They love this humor.  This type of humor adds to the personality of being more outspoken.  They tend to be louder and more outgoing.  They are not afraid to make a mistake or ashamed to be broke.  They will also openly admit how much they save on something they buy.  To save money is very cool.  The Kansai attitude is perfectly shown in the fans of the Hanshin Tigers.

Tokyo has a different mindset.  They are embarrassed about failure.  They are afraid to admit a mistake.  They have a pride and don't want to be the center of attention and especially dislike being made a fool of.  They tend to be more reserved compared to Osaka.  They are not as thrifty and will not tell how much they spend on something.  Most find the Osaka humor crude and distasteful.

Fashion

The fashion is also different.  Women in Tokyo will dress more modestly.  They have a more business twist to fashion and dress more professionally.   Whereas women in Osaka like a unique style.  They like to be more individualistic.  They like more color, high heels, dyed hair, and are not afraid to be different.  However, name brands are important to women in both locations.  They like to show off their designer accessories and clothing.  On a side note while shopping in Kansai feel free to try on clothing and not make a purchase, but in Tokyo it is considered rude or frowned upon to try something on and not purchase it afterward.

Language

Another major difference between the two is the language.  Both locations can tell right away where you are from based on your Japanese.  Osaka has a slang called Osaka ben or Kansai ben.  They use different words or they sometimes change words.  Tokyo's Japanese is considered the most formal and correct, especially for people learning Japanese, this is the form you will learn.  It is the most commonly used form.  Osaka takes pride in it's language.  They do not expect anyone to use their form, but would like people to understand that it is different and do not want others to force them to use the Tokyo form.

Food

One last major difference is the food.  Osaka takes great pride in their food.  Osaka is famous for this living to eat attitude.  They have many favorite dishes.  Their most famous is tako yaki.  These are the small balls of dough with a piece of octopus in the middle.  You can find these vendors just about anywhere, anytime.  You won't have the Osaka experience without trying one of these famous balls.

These are just a few differences between the two.  Hope this helps you with your experience in Japan.  If you have noticed some others please feel free to add them and give your opinion.

Also check out our other tips about living in Japan found in our blog series Advice about living in Japan.