Abstract Human mesenchymal stem cells (MSC) from adult and fetal tissues are promising candidates for cell therapy but there is a need to identify the optimal source for bone regeneration. We have previously characterized MSC populations in first trimester fetal blood, liver, and bone marrow and we now evaluate their osteogenic differentiation potential in comparison to adult bone marrow MSC. Using quantitative real-time RT-PCR, we demonstrated that 16 osteogenic-specific genes (OC, ON, BSP, OP, Col1, PCE, Met2A, OPG, PHOS1, SORT, ALP, BMP2, CBFA1, OSX, NOG, IGFII) were expressed in both fetal and adult MSC under basal conditions and were up-regulated under osteogenic conditions both in vivo and during an in vitro 21-day time-course. However, under basal conditions, fetal MSC had higher levels of osteogenic gene expression than adult MSC. Upon osteogenic differentiation, fetal MSC produced more calcium in vitro and reached higher levels of osteogenic gene up-regulation in vivo and in vitro. Second, we observed a hierarchy within fetal samples, with fetal bone marrow MSC having greater osteogenic potential than fetal blood MSC, which in turn had greater osteogenic potential than fetal liver MSC. Finally, we found that the level of gene expression under basal conditions was positively correlated with both calcium secretion and gene expression after 21 days in osteogenic conditions. Our findings suggest that stem cell therapy for bone dysplasias such as osteogenesis imperfecta may benefit from preferentially using first trimester fetal blood or bone marrow MSC over fetal liver or adult bone marrow MSC.