Abstract To date, the plasticity, multipotentiality, and characteristics of progenitor cells from fetal skeletal tissue remain poorly defined. This study has examined cell populations from human fetal femurs in comparison with adult-derived mesenchymal cell populations. Real-time quantitative polymerase chain reaction demonstrated expression of mesenchymal progenitor cell markers by fetal-derived cells in comparison with unselected adult-derived and immunoselected STRO-1–enriched adult populations. Multipotentiality was examined using cells derived from femurs and single-cell clones, culture-expanded from explants, and maintained in basal medium prior to exposure to adipogenic, osteogenic, and chondrogenic conditions. Adipocyte formation was confirmed by Oil Red O lipid staining and aP2 immunocytochemistry, with expression of peroxisome proliferation-activated receptor-γ detected only in adipogenic conditions. In chondrogenic pellets, chondrocytes lodged within lacunae and embedded within dense proteoglycan matrix were observed using Alcian blue/Sirius red staining and type II collagen immunocytochemistry. Osteogenic differentiation was confirmed by alkaline phosphatase staining and type I collagen immunocytochemistry as well as by gene expression of osteopontin and osteocalcin. Single-cell clonal analysis was used to demonstrate multipotentiality of the fetal-derived populations with the formation of adipogenic, chondrogenic, and osteogenic populations. Mineralization and osteoid formation were observed after culture on biomimetic scaffolds with extensive matrix accumulation both in vitro and in vivo after subcutaneous implantation in severely compromised immunodeficient mice. These studies demonstrate the proliferative and multipotential properties of fetal femur–derived cells in comparison with adult-derived cells. Selective differentiation and immunophenotyping will determine the potential of these fetal cells as a unique alternative model and cell source in the restoration of damaged tissue.