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Tissue engineering has been used to enhance the utility of biomaterials for clinical bone repair by the incorporation of an osteogenic cell source into a scaffold followed by the in vitro promotion of osteogenic differentiation before host implantation. In this study, three-dimensional, partially demineralized bone scaffolds were investigated for their ability to support osteogenic differentiation of human bone marrow stromal cells (BMSCs) in vitro. Dynamic cell seeding resulted in homogeneous cell attachment and infiltration within the matrix and produced significantly higher seeding efficiencies when compared with a conventional static seeding method. Dynamically seeded scaffolds were cultured for 7 and 14 days in the presence of dexamethasone and evaluated on biochemical, molecular, and morphological levels for osteogenic differentiation. Significant elevation in alkaline phosphatase activity was observed versus controls over the 14-day culture, with a transient peak indicative of early mineralization on day 7. On the basis of RT-PCR, dexamethasone-treated samples showed elevations in alkaline phosphatase and osteocalcin expression levels at 7 and 14 days over nontreated controls, while bone sialoprotein was produced only in the presence of dexamethasone at 14 days. Scanning electron microscopy evaluation of dexamethasone-treated samples at 14 days revealed primarily cuboidal cells indicative of mature osteoblasts, in contrast to nontreated controls displaying a majority of cells with a fibroblastic cell morphology. These results demonstrate that partially demineralized bone can be successfully used with human BMSCs to support osteogenic differentiation in vitro. This osseous biomaterial may offer new potential benefits as a tool for clinical bone replacement.