Methylsulfonylmethane (MSM) is a naturally occurring, sulfate-containing, organic compound. It has been shown to stimulate the differentiation of mesenchymal stem cells into osteoblast-like cells and bone formation. In this study, we investigated whether MSM influences the differentiation of stem cells from human exfoliated deciduous teeth (SHED) into osteoblast-like cells and their osteogenic potential. Here, we report that MSM induced osteogenic differentiation through the expression of osteogenic markers such as osterix, osteopontin, and RUNX2, at both mRNA and protein levels in SHED cells. An increase in the activity of alkaline phosphatase and mineralization confirmed the osteogenic potential of MSM. These MSM-induced effects were observed in cells grown in basal medium but not osteogenic medium. MSM induced transglutaminase-2 (TG2), which may be responsible for the cross-linking of extracellular matrix proteins (collagen or osteopontin), and the mineralization process. Inhibition of TG2 ensued a significant decrease in the differentiation of SHED cells and cross-linking of matrix proteins. A comparison of mineralization with the use of mineralized and demineralized bone particles in the presence of MSM revealed that mineralization is higher with mineralized bone particles than with demineralized bone particles. In conclusion, these results indicated that MSM could promote differentiation and osteogenic potential of SHED cells. This osteogenic property is more in the presence of mineralized bone particles. TG2 is a likely cue in the regulation of differentiation and mineral deposition of SHED cells in response to MSM.