All nucleated cells from the adult transgenic mouse H-2Kb-tsA58 harbor the temperature-sensitive mutant gene for SV40 large T-antigen. Bone marrow cells from this transgenic mouse were isolated, expanded and cloned in vitro under conditions permissive to the expression of stable T-antigen. Clones of marrow-derived mesenchymal progenitor cells were tested in vitro and in vivo for their capacity to differentiate into mature mesenchymal phenotypes of bone, cartilage, muscle, adipose, and hematopoietic support cells (termed "stromacytes"). Mono-, bi-, and tri-potential clones were identified that were able to differentiate into bone, adipose and stromacyte phenotypes. A mixed population of cells showed some chondrocytic potential in vivo, however, no evidence of cartilage matrix production was detected in vitro for any of the immortomouse clones. These results support the hypothesis that marrow contains multiple progenitor cells that are part of a mesenchymal lineage.