Bone formation in the embryo, and during adult fracture repair and remodeling, involves the progeny of a small number of cells called mesenchymal stem cells (MSCs). These cells continuously replicate themselves, while a portion become committed to mesenchymal cell lineages such as bone, cartilage, tendon, ligament, and muscle. The differentiation of these cells, within each lineage, is a complex multistep pathway involving discrete cellular transitions much like that which occurs during hematopoiesis. Progression from one stage to the next depends on the presence of specific bioactive factors, nutrients, and other environmental cues whose exquisitely controlled contributions orchestrate the entire differentiation phenomenon. An understanding of the cellular and molecular events of osteogenic differentiation of MSCs provides the foundation for the emergence of a new therapeutic technology for cell therapy. The isolation and in vitro mitotic expansion of autologous human MSCs will support the development of novel protocols for the treatment of many clinically challenging conditions. For example, local bone defects can be repaired through site-directed delivery of MSCs in an appropriate carrier vehicle. Generalized conditions, such as osteoporosis, may be treatable by systemic administration of culture-expanded autologous MSCs or through biopharmaceutical regimens based on the discovery of critical regulatory molecules in the differentiation process. With this in mind, we can begin to explore therapeutic options that have never before been available.