Mesenchymal stem cells also called mesenchymal stromal cells (MSCs) are multipotent progenitors that can be found in many connective tissues including fat, bone, cartilage, and muscle. We report here a simple method to reproducibly differentiate human embryonic stem cells (hESCs) into MSCs that does not require the use of any feeder layers or exogenous cytokines. The cells obtained with this procedure have a normal karyotype, are morphologically similar to bone marrow MSCs, are contact-inhibited, can be grown in culture for about 20–25 passages, exhibit an immuno-phenotype similar to bone marrow MSCs (negative for CD34 and CD45, but positive for CD44, CD71, CD73, CD105, CD166, HLA ABC, and SSEA-4), and can differentiate into osteocytes and adipocytes. They are also a very useful source of autogenic feeder cells to support the growth of undifferentiated hESCs. The ability to produce MSCs from hESCs should prove useful in obtaining large amounts of genetically identical and genetically modifiable MSCs that can be subsequently used to study the biology of MSCs as well as possible therapeutic applications.