Bone marrow contains a non-hematopoietic, clonogenic, multipotent population of stromal cells that are later called mesenchymal stem cells (MSC). Similar cells that share many common features with MSC are also found in other organs, which are thought to contribute both to normal tissue regeneration and to pathological processes such as heterotopic ossification (HO), the formation of ectopic bone in soft tissue. Understanding the microenvironmental factors that regulate MSC in vivo is essential both for understanding the biology of the stem cells and for effective translational applications of MSC. Unfortunately, this important aspect has been largely underappreciated. This review tries to raise the attention and highlight this critical issue by updating the relevant literature along with discussions of the key issues in the area.