Mesenchymal stem cells capable of differentiating into multiple cell types are potentially useful therapeutically for regeneration of bone and cartilaginous tissues. Multipotent fibroblastic C3H10T1/2 cells are known to differentiate into osteoblasts, chondrocytes, and adipocytes in response to certain growth factors. In this study we compared the effects of bone morphogenetic protein (BMP)-2 on the differentiation of C3H10T1/2 and MC3T3-E1 preosteoblastic cells. Incubation of these cells with BMP-2 resulted in a dose- and time-dependent increase in alkaline phosphatase activity, but the increase in MC3T3-E1 cells was much higher than that in C3H10T1/2 cells. BMP-2 also induced differentiation of C3H10T1/2 cells but not MC3T3-E1 cells into chondrocytes and adipocytes. Reverse transcription-polymerase chain reaction analysis showed that these commitments were accompanied by the specific expression of osteocalcin, aggrecan, and PPARgamma. To investigate the in vivo differential property, these cells were inoculated with BMP-2 in a diffusion chamber and transplanted into the mouse peritoneal cavity for 4 weeks. The transplanted C3H10T1/2 cells formed mineralized bone containing chondrocytes and adipocytes, whereas MC3T3-E1 created only bony tissue. Our results indicate that BMP-2 can induce the differentiation of C3H10T1/2 into osteoblasts, chondrocytes, and adipocytes in both in vivo and in vitro conditions, and that C3H10T1/2 could be used to examine the BMP-2-induced regulatory mechanisms of mesenchymal differentiation.