The inherited skeletal dysplasia osteogenesis imperfecta (OI) results in multiple fractures and is currently treated empirically. We transplanted human first-trimester fetal blood mesenchymal stem cells (MSCs) into homozygous oim mice in utero. This resulted in a two-thirds reduction in long bone fractures (P < .01), with fewer fractures per mouse (median 1, range 0-2 in mice that received transplants vs median 3, range 1-5 in mice that did not receive transplants by 12 weeks, P < .01). Nearly all mice that did not receive transplants had fractures (47 [97.9%] of 48), in contrast to 17 (58.6%) of 29 4- to 12-week-old mice that received transplants (P < .01). Transplantation was associated with increased bone strength (P < .01), thickness (P < .01), and length (P < .01), and normalization/reduction of growth plate height in 4- to 12-week-old oim was reduced in mice that underwent transplantion (P < .001). More donor cells were found in bone tissues compared with other organs (P < .001), with cells clustered in areas of active bone formation and remodeling, and at sites of fracture healing. Donor cells found in the bone expressed osteoblast lineage genes, and produced the extracellular bone structural protein osteopontin. Finally, MSC transplantation decreased bone hydroxyproline content. In conclusion, intrauterine transplantation of fetal MSCs markedly reduced fracture rates and skeletal abnormalities in a mouse model of the intermediate severity type III OI, suggesting a scientific basis for MSC treatment of affected human fetuses.