The process of bone formation can be approximated in vitro in the form of a mineralized nodule. Osteoprogenitors and mesenchymal stem cells, the immediate precursors to the osteoprogenitor, when placed into culture proliferate and differentiate into osteoblasts. These osteoblasts secrete and mineralize a matrix during a period of 3–4 wk. The differentiation potential of embryonic stem cells (ESCs) suggests that ESCs should also have the ability to form bone nodules in vitro. ESCs were allowed to form embryoid bodies, which were disrupted and plated at concentrations as low as 25 cells/cm2 . By 7 d postplating, a significant percentage of the colonies were morphologically characteristic of other types of osteogenic cultures. By 3 wk in culture, these colonies go on to form layered nodules. In a typical experiment, approx 60% of the colonies contain mineralized nodules, as revealed by staining of fixed cultures. Quantitative reverse transcriptase polymerase chain reaction analysis for genes characteristic of the osteoblast lineage has been used to confirm the presence of mature osteoblasts. Differentiation of ESCs into the osteoblast lineage will be a valuable tool for addressing pertinent questions about the proliferation, differentiation, survival, and intercellular communication between cells of the bone lineage in vitro.