In the present study, we investigated whether the in vivo bone-forming capacity of human bone marrow-derived stromal cells (HMSCs) could be enhanced by recombinant human bone morphogenetic protein-2 (rhBMP-2). The HMSCs obtained from seven donors (5-54 years of age) were passaged three to six times. Passaged HMSCs exhibited the osteoblastic phenotype in vitro, including: (a) an increase in alkaline phosphatase (ALP) activity in response to dexamethasone, ascorbic acid, and beta-glycerophosphate: and (b) mRNA expression for markers of osteoblastic lineage (ALP, osteopontin, osteocalcin, and parathyroid hormone-receptor) and BMP-2, -4, and -6 detected by reverse transcription-polymerase chain reaction. For the in vivo assay, transplants were subcutaneously implanted into nude mice as follows: group A (vehicle); group B (rhBMP-2); group C (HMSCs with vehicle); and group D (HMSCs with rhBMP-2). Transplants were obtained 2 and 4 weeks after implantation. Correlated radiographic findings, histological observations, and in situ hybridization using species-specific probes showed that the group B transplants contained bone tissue of mouse origin, which was observed at the periphery of the transplants. Four weeks after implantation, small amounts of HMSCs-derived bone tissue were detected at the periphery in two of seven transplants in group C. In contrast, five of seven group D transplants exhibited HMSCs-derived bone tissue, which was located at the center of the transplants and was surrounded by mouse bone tissue. Furthermore, HMSCs-derived chondrogenesis was detected in two of seven group D transplants. The results of the present study demonstrate that culture-expanded HMSCs preserve the osteoblastic phenotype, and the in vivo bone-forming capacity can be promoted by rhBMP-2.