Regenerative medicine provides the hope for many intractable diseases as a treatment option and the area is currently the subject of intense investigation in academia and industry. Human bone marrow stromal cells (HBMSCs) possess the ability to differentiate into a variety of cell types of the stromal lineage including cells of the osteogenic and chondrogenic lineages. However, the process of in vitro differentiation is usually inefficient, difficult to reproduce in many cases and, to date, unable to produce homogenous cell populations, which is critical for tissue engineering. Epigenetic regulation of gene expression is recognized as a key mechanism governing cell determination, commitment, and differentiation as well as maintenance of those states. The main components of epigenetic control are DNA methylation and histone acetylation. During development, the epigenetic status changes as cells differentiate along specific lineages. We reasoned that epigenetic modifiers might direct the differentiation pathway of HBMSCs towards either osteogenic or chondrogenic lineage. HBMSCs were serum-starved for 24 hours to synchronise the cell cycle, then treated on three consecutive days either with the DNA demethylating agent 5-Aza-deoxycytidine (5-Aza-dC) 1?M, or the histone deacetylase inhibitor Trichostatin A (TSA) 100 nM or a combination of both. After confluency, the cells were grown in pellet culture for 21 days to facilitate formation of an extracellular matrix. 5-Aza-dC increased the amount of osteoid in the pellet by at least 5 fold compared with controls as assessed by histochemistry, whereas TSA enhanced formation of a cartilage matrix. The differentiation was further enhanced by culturing the pellets in osteogenic or chondrogenic media. These studies suggest that loss of DNA methylation stimulates osteogenic differentiation, whereas inhibition of histone deacetylation favours chondrogenesis. Epigenetic changes thus play an important role in HBMSCs differentiation and offer new approaches in skeletal tissue engineering programs. The challenge will be to define the crucial genes in which loss of DNA methylation has taken place or how changes in histone acetylation (and other histone modifications) affect lineage differentiation.