Multipotent mesenchymal stem cells with extensive self-renewal properties can be easily isolated and rapidly expanded in culture from small volumes of amniotic fluid. These cells, namely, amniotic fluid-stromal cells (AFSCs), can be regarded as an attractive source for tissue engineering purposes, being phenotypically and genetically stable, plus overcoming all the safety and ethical issues related to the use of embryonic/fetal cells. LMP3 is a novel osteoinductive molecule acting upstream to the main osteogenic pathways. This study is aimed at delineating the basic molecular events underlying LMP3-induced osteogenesis, using AFSCs as a cellular model to focus on the molecular features underlying the multipotency/differentiation switch. For this purpose, AFSCs were isolated and characterized in vitro and transfected with a defective adenoviral vector expressing the human LMP3. LMP3 induced the successful osteogenic differentiation of AFSC by inducing the expression of osteogenic markers and osteospecific transcription factors. Moreover, LMP3 induced an early repression of the Kruppel-like factor-4, implicated in MSC stemness maintenance. KLF4 repression was released upon LMP3 silencing, indicating that this event could be reasonably considered among the basic molecular events that govern the proliferation/differentiation switch during LMP3-induced osteogenic differentiation of AFSC.