Mesenchymal stem cells (MSCs) are a population of pluripotent cells within the bone marrow microenvironment defined by their ability to differentiate into cells of the osteogenic, chondrogenic, tendonogenic, adipogenic, and myogenic lineages. We have developed methodologies to isolate and culture-expand MSCs from human bone marrow, and in this study, we examined the MSC's role as a stromal cell precursor capable of supporting hematopoietic differentiation in vitro. We examined the morphology, phenotype, and in vitro function of cultures of MSCs and traditional marrow-derived stromal cells (MDSCs) from the same marrow sample. MSCs are morphologically distinct from MDSC cultures, and flow cytometric analyses show that MSCs are a homogeneous cell population devoid of hematopoietic cells. RT-PCR analysis of cytokine and growth factor mRNA in MSCs and MDSCs revealed a very similar pattern of mRNAs including IL-6, -7, -8, -11, -12, -14, and -15, M-CSF, Flt-3 ligand, and SCF. Steady-state levels of IL-11 and IL-12 mRNA were found to be greater in MSCs. Addition of IL-1alpha induced steady-state levels of G-CSF and GM-CSF mRNA in both cell preparations. In contrast, IL-1alpha induced IL-1alpha and LIF mRNA levels only in MSCs, further emphasizing phenotypic differences between MSCs and MDSCs. In long-term bone marrow culture (LTBMC), MSCs maintained the hematopoietic differentiation of CD34+ hematopoietic progenitor cells. Together, these data suggest that MSCs represent an important cellular component of the bone marrow microenvironment.