Since its osteoinductive capacity has been established, demineralized bone matrix is considered a suitable alternative to bone autograft in the healing of osseous defects. The mechanisms of bone formation induction are still not fully understood. In this study we assessed the effects of a dispersion of bovine bone extract COLLOSS (BPE) with regard to proliferation and differentiation of a human mesenchymal stem cell line overexpressing human telomerase reverse transcriptase (hMSC-TERT). Proliferation rate was determined by (3)H-thymidine incorporation. The differentiation of hMSC-TERT cells to osteoblastic cells was assessed by means of measuring alkaline phosphatase activity and collagen synthesis in vitro. Both undifferentiated and osteoblast-differentiated hMSC-TERT cells were investigated for response to BPE. The metabolic responses to BPE were compared to unstimulated cells and cells stimulated with bovine collagen (COL). Undifferentiated hMSC-TERT cells responded to BPE with increased proliferation and decreased alkaline phosphatase activity. Osteoblastic differentiated hMSC-TERT cells had a diminished proliferative response and an increased alkaline phosphatase activity and collagen synthesis. Our study demonstrated significant metabolic effects of BPE on hMSC-TERT cells, which were highly dependant on the differentiated state of the cells.