Primary human multipotent mesenchymal stromal cells (MSCs) are capable of self renewal or differentiation into several different lineages, including osteoblasts, chondrocytes and adipocytes. However, upon prolonged in vitro culture, MSCs tend to undergo spontaneous osteogenic differentiation. Here, we address the possible role of endogenous osteogenic bone morphogenetic proteins (BMPs) in in situ osteoblastic differentiation of human MSCs. Human MSCs consistently express biologically active BMP-2, BMP-4 and BMP-6 in addition to all BMP-activated receptors, which are functional as shown by the induction of alkaline phosphatase (ALP) activity and up-regulation of osteogenic genes (ALP, BSP1, collagen I and Runx2) following BMP-2 exposure. Since glycosaminoglycans (GAGs) have been implicated in the modulation of the osteogenic bioactivity of BMPs, we reduced sulphated cell surface GAGs by NaClO₃ treatment and found significantly reduced osteogenic gene expression and ALP activity, suggesting that this was partly due to the reduced biological activity of endogenous BMPs. Antagonising osteogenic BMP activity led to a significant reduction in the ALP activity and down-regulation of the transcription factor Runx2 associated with osteogenic development. Blocking BMP receptor type I kinase function with dorsomorphin demonstrated that endogenous osteogenesis was independent of Smad activation but was dependent on phosphatidylinositol 3-kinase (PI-3K). Inclusion of the PI-3K kinase inhibitor Ly294002 significantly reduced osteogenic gene expression and ALP activity. Spontaneous mineralisation was also abrogated following PI-3K inhibition. Thus, endogenous BMPs could contribute to spontaneous osteogenesis through Smad-independent PI-3K-dependent signalling.