To facilitate bone healing in difficult circumstances, and to replace conventional therapeutic modalities, highly purified bone marrow-derived human mesenchymal stem cells (hMSCs) were investigated for induction of their osteogenic lineage upon provision of cytokine cues in vitro and in the cranial defect model in vivo. Alkaline phosphatase-expressing cells were most frequently observed when the hMSCs were treated with 2.5 ng/ml of basic fibroblast growth factor (bFGF) and 50 ng/ml of bone morphogenetic protein (BMP)-2 for 4 days in culture after a 6-day incubation in osteogenic medium containing dexamethasone, ascorbic acid-2-phosphate, and β-glycerophosphate. Four-millimeter full-thickness cranial defect wounds were made in male nude rats (F344/NJCl-rnu), whose deficit in the T cell compartment prevented T-cell–mediated cellular rejection. The animals were treated for 4 weeks with hMSCs and application of 10 µg each of bFGF and BMP-2 that had been soaked into a gelatin sponge carrier. Significant bone mineral density was observed by dual X-ray absorptiometry and this treatment also produced histologically mature osteocytes surrounded by both osteoblasts and osteoclasts expressing alkaline phosphatase and osteocalcin. The bone mineral densities and histological structures were matched at 8 weeks post-transplantation. Therefore, human bone marrow-derived mesenchymal stem cells are able to differentiate into an osteogenic lineage upon cytokine stimulation and accelerate healing in a nude rat cranial bone healing model.