AbstractUse of human induced pluripotent stem cells (h-iPSCs) for bone tissue engineering is most appealing, because h-iPSCs are an inexhaustible source of osteocompetent cells. The present study investigated the contribution of undifferentiated h-iPSCs and elucidated aspects of the underlying mechanism(s) of the involvement of these cells to new bone formation. Implantation of undifferentiated h-iPSCs seeded on coral particles in ectopic sites of mice resulted in expression of osteocalcin and DMP-1, and in mineral content similar to that of the murine bone. The number of the implanted h-iPSCs decreased with time and disappeared by 30 days post-implantation. In contrast, expression of the murine osteogenic genes at day 15 and 30 post-implantation provided, for the first time, evidence that the implanted h-iPSCs affected the observed outcomes via paracrine mechanisms. Supporting evidence was provided because supernatant conditioned media from h-iPSCs (h-iPSC CM), promoted the osteogenic differentiation of human mesenchymal stem cells (h-MSCs) in vitro. Specifically, h-iPSC CM induced upregulation of the BMP-2, BMP-4 and BMP-6 genes, and promoted mineralization of the extracellular matrix. Given the current interest in the use of h-iPSCs for regenerative medicine applications, our study contributes new insights into aspects of the mechanism underlying the bone promoting capability of h-iPSCs.