Adult human mesenchymal stem cells from bone marrow (BM-MSC) represent a promising source for skeletal regeneration. Perinatal MSC from Wharton's Jelly of the umbilical cord (UC-MSC) are expected to possess enhanced differentiation capacities due to partial expression of pluripotency markers. For bone tissue engineering, it is important to analyse in vitro behaviour of stem cell/biomaterial hybrids concerning in vivo integration into injured tissue via migration, matrix remodelling and differentiation. This study compares the cell-mediated remodelling of three-dimensional collagen I/III gels during osteogenic differentiation of both cell types. When activated through collagen contact and subjected to osteogenic differentiation, UC-MSC differ from BM-MSC in expression and synthesis of extracellular matrix (ECM) proteins as shown by histology, immunohistochemistry, Western Blot analysis and realtime-RT-PCR. The biosynthetic activity was accompanied in both cell types by the ultrastructural appearance of hydroxyapatite/calcium crystals and osteogenic gene induction. Following secretion of matrix metalloproteinases (MMP), both MSC types migrated into and colonised the collagenous matrix causing matrix strengthening and contraction. These results indicate that UC-MSC and BM-MSC display all features needed for effective bone fracture healing. The expression of ECM differs in both cell types considerably, suggesting different mechanisms for bone formation and significant impact for bone tissue engineering.