Mesenchymal stem cell (MSC) is a type of tissue stem cell. In clinical studies, cultured MSCs have shown important therapeutic effects on diseases via the reduction of neurological defects and regulation of immune responses. However, in vivo MSC localization, function, and properties are poorly understood; therefore, the molecular understanding of MSCs hierarchy is less advanced compared to hematopoietic stem cell hierarchy. To address these issues, we developed a method that enables us to visualize MSCs, manipulate their function, and analyze their molecular biology in vivo. Paired-related homeobox 1 (Prrx1)-positive cells are transiently observed during limb skeletal development in mice. Prrx1-positive cells form heterogeneous populations comprising multiple mesenchymal progenitors with different lineages that are developing into osteoblasts, chondrocytes, adipocytes, fibroblasts, and tendon and ligament cells. Our results suggest that osteoblast differentiation in the calvaria begins at the Prrx1+Sca1+ MSC stage with sequential progression to Prrx1+Sca1- cells, then Osterix+Prrx1-Sca1- osteoblast precursors, which eventually form mature α1(I)-collagen+ osteoblasts. Using Runt-related transcription factor 2 (Runx2) conditional knockout mice, furthermore, we found that the essential period of Runx2 function in intramembranous ossification likely begins at the Prrx1+Sca1+ MSC stage and ends at the Osterix+Prrx1-Sca1- osteoblast precursor stage (before mature the α1(I)-collagen+ osteoblasts appear). This approach will enable us to understand the in vivo molecular biology features of MSCs, leading to their therapeutic applications for tissue repair and regeneration. This development can also contribute to the field of pluripotent stem cell by enabling the transplantation of lineage-restricted mesenchymal progenitors.