Tissue engineering of large bone defects is approached through implantation of autologous osteogenic cells, generally referred to as multipotent stromal cells or mesenchymal stem cells (MSCs). Animal-derived MSCs successfully bridge large bone defects, but models for ectopic bone formation as well as recent clinical trials demonstrate that bone formation by human MSCs (hMSCs) is inadequate. The expansion phase presents an attractive window to direct hMSCs by pharmacological manipulation, even though no profound effect on bone formation in vivo has been described so far using this approach. We report that activation of protein kinase A elicits an immediate response through induction of genes such as ID2 and FosB, followed by sustained secretion of bone-related cytokines such as BMP-2, IGF-1, and IL-11. As a consequence, PKA activation results in robust in vivo bone formation by hMSCs derived from orthopedic patients.