Stromal cells generated in long-term cultures appear to follow a vascular smooth muscle differentiation pathway. Such a pathway, comprising several steps hallmarked by the expression of cytoskeletal and extracellular matrix markers, is found not only for bone marrow stromal cells, but also for stromal cells generated from the different developmental sites of hematopoiesis (yolk sac, aorta-gonad-mesonephros region, fetal liver, and spleen). Factors responsible for this differentiation pathway and its functional significance are discussed. The mesenchymal founder cell might be, at least for bone marrow, a mesenchymal stem cell (MSC), giving rise to stromal cells, endothelial cells, adipocytes, osteoblasts, and chondrocytes. A feature that distinguishes the MSC lineage from that of the hematopoietic stem cell lineage is that differentiation pathways are not strictly delineated, since even apparently fully differentiated cells from a given lineage have the potential to convert into another lineage (phenotype “plasticity”) and intermediate cell phenotypes are observed. A stochastic Repression/Induction model that would account for this plasticity is proposed.