Although bone marrow–derived mesenchymal stem cells (MSCs) have been extensively explored in bone tissue engineering, only few studies using mesenchymal stem cells from mandible (M-MSCs) have been reported. However, mesenchymal stem cells from mandible have the potential to be as effective as femur-derived mesenchymal stem cells (F-MSCs) in regenerating bone, especially in the orofacial regions, which share embryonic origin, proximity, and accessibility. M-MSCs were isolated and characterized using mesenchymal stem cell–specific markers, colony forming assay, and multi-potential differentiation. In vitro osteogenic potential, including proliferation, osteogenic gene expression, alkaline phosphatase activity, and mineralization, was examined and compared. Furthermore, in vivo bone formations of F-MSCs and M-MSCs in rat critical sized defect were evaluated using microCT and histology. M-MSCs from rat could be successfully isolated and expanded while preserving their MSC’s characteristics. M-MSCs demonstrated a comparable proliferation and mineralization potentials and in vivo bone formation as F-MSCs. M-MSCs is a promising cell source candidate for craniofacial bone tissue engineering.