Bone marrow‐derived mesenchymal stem cells (MSC) are multipotent, self‐renewing, mesodermal‐origin stem cells that are sequestered in the endosteal compartment. MSC are maintained in a relative state of quiescence in vivo but in response to a variety of physiological and pathological stimuli, proliferate and differentiate into osteoblasts, chondrocytes, adipocytes, or hematopoiesis‐supporting stromal cells. Little is understood regarding the cellular or molecular events underlying MSC fate decisions. We report that human MSC (hMSC) cultured in defined, serum‐free conditions respond to a narrow spectrum of growth factors with osteogenic commitment, differentiation, and hydroxyapatite deposition. Of the osteogenic factors we examined, only treatment with bone morphogenetic protein (BMP) results in osteoinduction under defined serum‐free conditions. Among BMP‐2, 4, 6, and 7, BMP‐6 is the most consistent and potent regulator of osteoblast differentiation and, of these BMPs, only BMP‐6 gene expression is detected prior to hMSC osteoblast differentiation. Addition of exogenous BMP‐6 to hMSC induces the expression or upregulation of a repertoire of osteoblast‐related genes including type I collagen, osteocalcin, bone sialoprotein, and their regulatory transcription factors Cbfa1/Runx2, and Osterix. This translates into increased production of osteogenic extracellular matrix (ECM) with subsequent hydroxyapatite deposition. J. Cell. Biochem. 98: 538–554, 2006. © 2005 Wiley‐Liss, Inc.