In orthopedics, the regeneration and repair of cartilage or bone defects after trauma, cancer, or metabolic disorders is still a major clinical challenge. Through developmental plasticity, bone marrow mesenchymal stem cells (BMSSCs) are important seed cells for the musculoskeletal tissue engineering approach. The present study sought to determine the ectopic osteogenic and chondrogenic ability of BMSSCs in combination with a scaffolding material made from alginate gel. After isolation from the bone marrow of BALB/C mice, BMSSCs were expanded in vitro and induced to chondrogenesis or osteogenesis for 14 days, respectively. Subsequently, these induced cells were seeded into alginate gel, and the constructs implanted into BALB/C nude mice subcutaneously for up to 8 weeks. In the histological analysis, the transmission electron microscopy of the retrieved specimens at various intervals showed obvious trends of ectopic cartilage or bone formation along with the alteration of the cellular phenotype. Simultaneously, the results of the immunohistochemical staining and RT-PCR both confirmed the expression of specific extracellular matrix (ECM) markers for cartilaginous tissue, such as collagen type II (Col-II), SOX9, and aggrecan, or alternatively, markers for osteoid tissue, such as osteopontin (OPN), osteocalcin (OCN), and collagen type I (Col-I). During subcutaneous implantation, the elevating production of ECM and the initiation of the characteristic structure were closely correlated with the increase of time. In contrast, there was an apparent degradation and resorption of the scaffolding material in blank controls, but with no newly formed tissues. Finally, the constructs that were made of non-induced BMSSCs nearly disappeared during the 8 weeks after implantation. Therefore, it is suggested that alginate gel, which is combined with BMSSCs undergoing differentiation into skeletal lineages, may represent a useful strategy for the clinical reconstruction of bone and cartilage defects.