Although the use of embryonic stem cells in the assisted repair of musculoskeletal tissues holds promise, a direct comparison of this cell source with adult marrow-derived stem cells has not been undertaken. Here we have compared the osteogenic differentiation potential of human embryonic stem cells (hESC) with human adult-derived stem cells in vivo. hESC lines H7, H9, the HEF-1 mesenchymal-like, telomerized H1 derivative, the human embryonic kidney epithelial cell line HEK293 (negative control), and adult human mesenchymal stem cells (hMSC) were either used untreated or treated with osteogenic factors for 4 days prior to injection into diffusion chambers and implantation into nude mice. After 11 weeks in vivo chambers were removed, frozen, and analyzed for evidence of bone, cartilage, and adipose tissue formation. All hESCs, when pretreated with osteogenic (OS) factors gave rise exclusively to bone in the chambers. In contrast, untreated hESCs (H9) formed both bone and cartilage in vivo. Untreated hMSCs did not give rise to bone, cartilage, or adipose tissue in vivo, while pretreatment with OS factors engendered both bone and adipose tissue. These data demonstrate that hESCs exposed to OS factors in vitro undergo directed differentiation toward the osteogenic lineage in vivo in a similar fashion to that produced by hMSCs. These findings support the potential future use of hESC-derived cells in regenerative medicine applications.