Growth factors, hormones, and other regulatory molecules are traditionally required in tissue engineering studies to direct the differentiation of progenitor cells along specific lineages. We demonstrate that mechanical stimulation in vitro, without ligament-selective exogenous growth and differentiation factors, induces the differentiation of mesenchymal progenitor cells from the bone marrow into a ligament cell lineage in preference to alternative paths (i.e., bone or cartilage cell lineages). A bioreactor was designed to permit the controlled application of ligament-like multidimensional mechanical strains (translational and rotational strain) to the undifferentiated cells embedded in a collagen gel. The application of mechanical stress over a period of 21 days up-regulated ligament fibroblast markers, including collagen types I and III and tenascin-C, fostered statistically significant cell alignment and density and resulted in the formation of oriented collagen fibers, all features characteristic of ligament cells. At the same time, no up-regulation of bone or cartilage-specific cell markers was observed.