Objectives. The biomembrane (induced membrane) formed around polymethylmethacrylate (PMMA) spacers has value in clinical applications for bone defect reconstruction. Few studies have evaluated its cellular, molecular or stem cell features. Our objective was to characterise induced membrane morphology, molecular features and osteogenic stem cell characteristics. Methods. Following Institutional Review Board approval, biomembrane specimens were obtained from 12 patient surgeries for management of segmental bony defects (mean patient age 40.7 years, standard deviation 14.4). Biomembranes from nine tibias and three femurs were processed for morphologic, molecular or stem cell analyses. Gene expression was determined using the Affymetrix GeneChip Operating Software (GCOS). Molecular analyses compared biomembrane gene expression patterns with a mineralising osteoblast culture, and gene expression in specimens with longer spacer duration (> 12 weeks) with specimens with shorter durations. Statistical analyses used the unpaired student t-test (two tailed; p < 0.05 was considered significant). Results. Average PMMA spacer in vivo time was 11.9 weeks (six to 18). Trabecular bone was present in 33.3% of the biomembrane specimens; bone presence did not correlate with spacer duration. Biomembrane morphology showed high vascularity and collagen content and positive staining for the key bone forming regulators, bone morphogenetic protein 2 (BMP2) and runt-related transcription factor 2 (RUNX2). Positive differentiation of cultured biomembrane cells for osteogenesis was found in cells from patients with PMMA present for six to 17 weeks. Stem cell differentiation showed greater variability in pluripotency for osteogenic potential (70.0%) compared with chondrogenic or adipogenic potentials (100% and 90.0%, respectively). Significant upregulation of BMP2 and 6, numerous collagens, and bone gla protein was present in biomembrane compared with the cultured cell line. Biomembranes with longer resident PMMA spacer duration (vs those with shorter residence) showed significant upregulation of bone-related, stem cell, and vascular-related genes. Conclusion. The biomembrane technique is gaining favour in the management of complicated bone defects. Novel data on biological mechanisms provide improved understanding of the biomembrane’s osteogenic potential and molecular properties. Cite this article: Dr H. E. Gruber. Osteogenic, stem cell and molecular characterisation of the human induced membrane from extremity bone defects. Bone Joint Res 2016;5:106–115. DOI: 10.1302/2046-3758.54.2000483