Induced pluripotent stem (iPS) cells are a type of undifferentiated cell that can be obtained from differentiated cells and have the pluripotent potential to differentiate into the musculoskeletal system, the myocardium, vascular endothelial cells, neurons, and hepatocytes. We therefore cultured mouse iPS cells in a DMEM containing 15% FBS, 10(-7) M dexamethasone, 10 mM β-glycerophosphate, and 50 μg/ml ascorbic acid for 3 weeks, in order to induce bone differentiation, and studied the expression of the bone differentiation markers Runx2 and osteocalcin using RT-PCR in a time-dependent manner. Osteocalcin, a bone differentiation marker in bone formation, exhibited the highest expression in the third week. In addition, the deposition of calcium nodules was observed using Alizarin red S staining. iPS cells cultured for bone differentiation were transplanted into severe combined immunodeficiency (SCID) mice, and the osteogenic potential exhibited after 4 weeks was studied. When bone differentiation-induced iPS cells were transplanted into SCID mice, bone formation was confirmed in soft X-ray images and tissue specimens. However, teratoma formation was confirmed in 20% of the transplanted models. When mouse iPS cells were treated with irradiation of 2 Gray (Gy) prior to transplantation, teratoma formation was inhibited. When mouse iPS cells treated in a likewise manner were xenotransplanted into rats, bone formation was confirmed but teratoma formation was not observed. It is believed that irradiation before transplantation is an effective way to inhibit teratoma formation.