Emerging data suggest that mesenchymal stem cells (MSCs) are part of a periendothelial niche, suggesting the existence of heterotypic cell-cell crosstalk between endothelial cells and MSCs that regulate MSCs in their local microenvironment. We determined the effects of paracrine factors secreted by human umbilical vein endothelial cells (HUVECs) on MSC survival, proliferation, and differentiation by using an optimized, serum-free HUVEC-conditioned medium (CM). HUVEC-CM induced a significant increase in the size and number of colony-forming units-fibroblast (CFU-F) and CFU-osteoblast (CFU-O) and stimulated the proliferation of MSCs as determined by 5-bromo-2'-deoxyuridine incorporation, compared with non-CM. We also demonstrated that CM significantly enhanced the osteogenic differentiation of MSCs as shown by alkaline phosphatase enzyme histochemistry and von Kossa staining of mineralized nodules as well as by quantitative reverse transcriptase-polymerase chain reaction analysis of osteogenic markers. In contrast, there was no effect on the adipogenic differentiation of MSCs. Bioinformatic integration of HUVEC and MSC gene expression datasets identified several candidate signaling pathways responsible for mediating these effects, including fibroblast growth factor, Wnt, bone morphogenetic protein, and Notch. These data suggest strongly that endothelial cells secrete a soluble factor (or factors) that stimulates progenitor cell activity and, selectively, the osteogenic differentiation of MSCs that could contribute to niche exit.