Although bone marrow-derived mesenchymal stromal cells (BMSCs) are a main cell source for tissue-engineered bone (TEB), the clinical use of BMSCs is restricted due to the invasive bone marrow aspiration procedure and the decline in available number of mesenchymal stromal cells (MSCs) and differentiation potential with increasing age. Umbilical cord-derived MSCs (UCMSCs) are likely to be a promising alternative cell source for TEB due to their higher availability and potential to proliferate and differentiate. To assess this possibility, we studied bone morphogenetic protein 2 (BMP2)-induced osteogenic differentiation and activation of signaling pathways in UCMSCs and BMSCs. UCMSCs showed a phenotype and differentiation potential similar to that of BMSCs. After 14 days of BMP2 treatment, the overall expression of several osteogenic-specific phenotypes (type I collagen, osteopontin, and osteocalcin) was similar for UCMSCs and BMSCs. The signaling pathway by which BMP2 induced differentiation of both cell types involved the membrane receptor-initiated signals including SMADs, P38, and extracellular regulated kinase. The similar characteristics of BMP2-induced osteogenic differentiation of UCMSCs and BMSCs in vitro would support the use of UCMSCs in TEB.