The current study was undertaken with the goal being isolation, cultivation, and characterization of ovine mesenchymal stem cells (oMSC). Furthermore, the objective was to determine whether biological active polycaprolactone-co-lactide (trade name PCL) scaffolds support the growth and differentiation of oMSC in vitro. The oMSC were isolated from the iliac crest of six merino sheep. Three factors were used to demonstrate the MSC properties of the isolated cells in detail. (1) Their ability to proliferate in culture with a spindle-shaped morphology, (2) presence of specific surface marker proteins, and (3) their capacity to differentiate into the three classical mesenchymal pathways, osteoblastic, adipogenic, and chondrogenic lineages. Furthermore, embroidered PCL scaffolds were coated with collagen I (coll I) and chondroitin sulfate (CS). The porous structure of the scaffolds and the coating with coll I/CS allowed the oMSC to adhere, proliferate, and to migrate into the scaffolds. The coll I/CS coating on the PCL scaffolds induced osteogenic differentiation of hMSC, without differentiation supplements, indicating that the scaffold also has an osteoinductive character. In conclusion, the isolated cells from the ovine bone marrow have similar morphologic, immunophenotypic, and functional characteristics as their human counterparts. These cells were also found to differentiate into multiple mesenchymal cell types. This study demonstrates that embroidered PCL scaffolds can act as a temporary matrix for cell migration, proliferation, and differentiation of oMSC. The data presented will provide a reliable model system to assess the translation of MSC-based therapy into a variety of valuable ovine experimental models under autologous settings.