Expression of telomerase activity presumably is involved in maintaining self-replication and the undifferentiated state of stem cells. Adult mouse bone marrow mesenchymal stem cells (mMSCs) are multipotential cells capable of differentiating into a variety of lineage cell types, including adipocytes and chondrocytes. Here we show that the lacking telomerase of mMSC lose multipotency and the capacity to differentiate. Primary cultures of mMSCs were obtained from both telomerase knockout (mTR(-/-)) and wild-type (WT) mice. The MSCs isolated from mTR(-/-) mice failed to differentiate into adipocytes and chondrocytes, even at early passages, whereas WT MSCs were capable of differentiation. Consistent with other cell types, late passages mTR(-/-)MSCs underwent senescence and were accompanied by telomere loss and chromosomal end-to-end fusions. These results suggest that in addition to its known role in cell replication, telomerase is required for differentiation of mMSCs in vitro. This work may be significant for further potentiating adult stem cells for use in tissue engineering and gene therapy and for understanding the significance of telomerase expression in the process of cell differentiation.