1,25-Dihydroxyvitamin D3 [1,25(OH)2D3] has many noncalcemic actions that rest on inhibition of proliferation and promotion of differentiation in malignant and normal cell types. 1,25(OH)2D3 stimulates osteoblast differentiation of human marrow stromal cells (hMSCs), but little is known about the effects of 25-hydroxyvitamin D3 [25(OH)D3] on these cells. Recent evidence shows that hMSCs participate in vitamin D metabolism and can activate 25(OH)D3 by CYP27B1/1α-hydroxylase. These studies test the hypothesis that antiproliferative and prodifferentiation effects of 25(OH)D3 in hMSCs depend on CYP27B1. We studied hMSCs that constitutively express high (hMSCshi-1α) or low (hMSCslo-1α) levels of CYP27B1 with equivalent expression of CYP24A1 and vitamin D receptor. In hMSCshi-1α, 25(OH)D3 reduced proliferation, downregulated proliferating cell nuclear antigen (PCNA), upregulated p21Waf1/Cip1, and decreased cyclin D1. Unlike 1,25(OH)2D3, the antiapoptotic effects of 25(OH)D3 on Bax and Bcl-2 were blocked by the P450 inhibitor ketoconazole. The antiproliferative effects of 25(OH)D3 in hMSCshi-1α and of 1,25(OH)2D3 in both samples of hMSCs were explained by cell cycle arrest, not by increased apoptosis. Stimulation of osteoblast differentiation in hMSCshi-1α by 25(OH)D3 was prevented by ketoconazole and upon transfection with CYP27B1 siRNA. These data indicate that CYP27B1 is required for 25(OH)D3's action in hMSCs. Three lines of evidence indicate that CYP27B1 is required for the antiproliferative and prodifferentiation effects of 25(OH)D3 on hMSCs: Those effects were not seen (1) in hMSCs with low constitutive expression of CYP27B1, (2) in hMSCs treated with ketoconazole, and (3) in hMSCs in which CYP27B1 expression was silenced. Osteoblast differentiation and skeletal homeostasis may be regulated by autocrine/paracrine actions of 25(OH)D3 in hMSCs. © 2011 American Society for Bone and Mineral Research.