Mesenchymal stem cells (MSCs) are defined as cells that undergo sustained in vitro growth and can give rise to multiple mesenchymal lineages. Because MSCs have only been isolated from tissue in culture, the equivalent cells have not been identified in vivo and little is known about their physiological roles or even their exact tissue location. In this study, we used phenotypic, morphological, and functional criteria to identify and prospectively isolate a subset of MSCs (PDGFRalpha+Sca-1+CD45-TER119-) from adult mouse bone marrow. Individual MSCs generated colonies at a high frequency and could differentiate into hematopoietic niche cells, osteoblasts, and adipocytes after in vivo transplantation. Naive MSCs resided in the perivascular region in a quiescent state. This study provides the useful method needed to identify MSCs as defined in vivo entities.