Mesenchymal stem cells (hMSCs) have been shown to differentiate into osteoblasts that, in turn, are capable of forming tissues analogous to bone. The present study was designed to investigate the inhibition of osteogenesis by hMSCs. Bone marrow-derived hMSCs were treated with transforming growth factor β-3 (TGFβ3) at various doses during or after their differentiation into osteogenic cells. TGFβ3 was encapsulated in poly(dl-lactic-co-glycolic acid) (PLGA) microspheres and released via controlled delivery in the osteogenic culture of hMSCs and hMSC-derived osteoblasts for up to 28 days. Controlled release of TGFβ3 inhibited the osteogenic differentiation of hMSCs, as evidenced by significantly reduced alkaline phosphatase activity and staining, as well as decreased mineral deposition. After hMSCs had been differentiated into osteoblasts, controlled release of TGFβ3 further inhibited not only alkaline phosphatase and mineral deposition but also osteocalcin expression. These findings demonstrate the potential for sustained modulation of the behavior of stem cells and/or stem cell-derived lineage-specific cells via controlled release of growth factor(s). The attenuation of osteogenic differentiation of MSCs may facilitate understanding not only the regulation and patterning of osteogenesis in development but also several pathological models such as osteopetrosis, craniosynostosis, and heart valve calcification.