The bone marrow stroma consists of a heterogeneous population of cells that provide the structural and physiological support for hematopoietic cells. Additionally, the bone marrow stroma contains cells with a stem-cell-like character that allows them to differentiate into bone, cartilage, adipocytes, and hematopoietic supporting tissues. Several experimental approaches have been used to characterize the development and functional nature of these cells in vivo and their differentiating potential in vitro. In vivo, presumptive osteogenic precursors have been identified by morphologic and immunohistochemical methods. In culture, the stromal cells can be separated from hematopoietic cells by their differential adhesion to tissue culture plastic and their prolonged proliferative potential. In cultures generated from single-cell suspensions of marrow, bone marrow stromal cells grow in colonies, each derived from a single precursor cell termed the colony-forming unit-fibroblast. Culture methods have been developed to expand marrow stromal cells derived from human, mouse, and other species. Under appropriate conditions, these cells are capable of forming new bone after in vivo transplantation. Various methods of cultivation and transplantation conditions have been studied and found to have substantial influence on the transplantation outcome. The finding that bone marrow stromal cells can be manipulated in vitro and subsequently form bone in vivo provides a powerful new model system for studying the basic biology of bone and for generating models for therapeutic strategies aimed at regenerating skeletal elements.