We set out to characterize stemness properties and osteogenic potential of sheep AEC (amniotic epithelial cells). AEC were isolated from 3-month-old fetuses and expanded in vitro for 12 passages. The morphology, surface markers, stemness markers and osteogenic differentiation were inspected after 1, 6 and 12 passages of expansion, with an average doubling time of 24 h. AEC clearly expressed the stemness markers Oct-3/4 (octamer-binding protein-3/4), Nanog, Sox2 and TERT (telomerase reverse transcriptase) and displayed low levels of global DNA methylation. Culture had moderate effects on cell conditions; some adhesion molecules progressively disappeared from the cell surface, and the expression of Sox2 and TERT was slightly reduced while Nanog increased. No changes occurred in the levels of DNA methylation. Cells organized in 3D spheroids were used for IVD (in vitro differentiation). Within these structures the cells developed a complex intercellular organization that involved extensive intercellular coupling despite continuous cell migration. Marked deposition of calcein in the ECM (extracellular matrix), increased ALP (alkaline phosphatase) activity, expression of bone-related genes (osteocalcin) and the matrix mineralization shown by Alizarin Red staining demonstrate that AEC can undergo rapid and extensive osteogenic differentiation. AEC introduced in experimental bone lesions survived in the site of implantation for 45 days and supported consistent bone neoformation, thus showing promising potential applications in osteogenic regenerative medicine.