The basic principle of bone induction for tissue engineering is to use stem cells, growth factors and organic matrix. KUSA/A1 cell is an example of bone marrow stromal stem cell, capable of differentiating into osteoblasts, chondrocytes and myotubes under inducing conditions. It has been reported that mature KUSA/A1 osteoblasts cultured in osteogenic condition, were able to induce a few bone formation in collagen hybridized PLGP sponge in vivo. This may be due to their low proliferation potential thereby not being able to obtain sufficient number of cells to promote large tissue repair. Because of this, in order to use KUSA/A1 cells with high cell proliferation activity to induce large amount of new bone, we evaluated whether KUSA/A1 cells in non-induction condition will maintain their immature stage. The result demonstrated that KUSA/A1 cells cultured in α-MEM maintained their immature stage in vitro. We further examined the osteoblastic differentiation under the influence of the host microenvironment in intraperitoneal diffusion chamber. The results indicated that immature KUSA/A1 cells in vivo cell culture differentiated into osteoblasts and produced mineralized bone-like tissue. Finally, we evaluated the effect of honeycomb scaffold to produce abundant bone formation using KUSA/A1 cells implanted in subcutaneous tissues of SCID mice. 1x10^6KUSA/Al cells with honeycomb scaffold showed abundant new bone formation. While, 5x10^6KUSA/Al cells alone showed only few small islands of new bone formation. This study support that KUSA/A1 cell is a good candidate as stem cells for basic research in bone tissue engineering.