Explant cultures of adult human trabecular bone fragments give rise to osteoblastic cells, that are known to express osteoblast-related genes and mineralize extracellular matrix. These osteoblastic cells have also been shown to undergo adipogenesis in vitro and chondrogenesis in vivo. Here we report the in vitro developmental potential of adult human osteoblastic cells (hOB) derived from explant cultures of collagenase-pretreated trabecular bone fragments. In addition to osteogenic and adipogenic differentiation, these cells are capable of chondrogenic differentiation in vitro in a manner similar to adult human bone marrow-derived mesenchymal progenitor cells. High-density pellet cultures of hOB maintained in chemically defined serum-free medium, supplemented with transforming growth factor-beta1, were composed of morphologically distinct, chondrocyte-like cells expressing mRNA transcripts of collagen types II, IX and X, and aggrecan. The cells within the high-density pellet cultures were surrounded by a sulfated proteoglycan-rich extracellular matrix that immunostained for collagen type II and proteoglycan link protein. Osteogenic differentiation of hOB was verified by an increased number of alkaline phosphatase-positive cells, that expressed osteoblast-related transcripts such as alkaline phosphatase, collagen type I, osteopontin and osteocalcin, and formed mineralized matrix in monolayer cultures treated with ascorbate, beta-glycerophosphate, and bone morphogenetic protein-2. Adipogenic differentiation of hOB was determined by the appearance of intracellular lipid droplets, and expression of adipocyte-specific genes, such as lipoprotein lipase and peroxisome proliferator-activated receptor gamma2, in monolayer cultures treated with dexamethasone, indomethacin, insulin and 3-isobutyl-1-methylxanthine. Taken together, these results show that cells derived from collagenase-treated adult human trabecular bone fragments have the potential to differentiate into multiple mesenchymal lineages in vitro, indicating their developmental plasticity and suggesting their mesenchymal progenitor nature.