ABSTRACT: Directing differentiation of human embryonic stem cells (hESC) into specific cell types using an easy and reproducible protocol is a perquisite for the clinical use of hESC in regenerative medicine protocols. Here, we report the generation of mesodermal cells with differentiation potential to myocytes, osteoblasts, chondrocytes and adipocytes. We demonstrate that during hESC differentiation as embryoid bodies (EB), inhibition of TGF-b/Activin/Nodal signaling using SB-431542 (SB) markedly up-regulated paraxial mesodermal markers (TBX6, TBX5), early myogenic transcriptional factors (Myf5, Pax7) as well as myocyte committed markers (NCAM, CD34, Desmin, MHC (fast), alpha-smooth muscle actin, Nkx2.5, cTNT). Establishing EB outgrowth cultures (SB-OG) in the presence of SB (1 uM) led to further enrichment of cells expressing markers for myocyte progenitor cell: CD34+ (33%), NCAM+ (CD56) (73%), PAX7 (25%) and mature myocyte proteins (MYOD1, tropomyocin, fast MHC an d SERCA1). Further analysis using DNA microarray revealed differential up-regulation of 117 genes (>2-fold compared to control cells) annotated to myogenic development and function. During ex vivo culture, contracting myocytes were observed (80% of the population) and the cells formed myofibres when implanted intramuscularly in vivo. Furthermore, in the presence of fetal bovine serum (10% FBS), SB-OG cells developed morphologically and phenotypically into a homogeneous stromal (mesenchymal) stem cell (MSC)-like population expressing characteristic MSC CD markers: CD44 (100%), CD73 (98%), CD146 (96%) and CD166 (88%). They were karyotypically normal and were able to differentiate ex vivo and in vivo into osteoblasts, adipocytes and chondrocytes.