We report the first clinical case of transplantation of autologous bone marrow-derived cells in vitro exposed to a novel recombinant human transforming growth factor (rhTGF)-β1 fusion protein bearing a collagen-binding domain (rhTGF-β1-F2), dexamethasone (DEX) and β-glycerophosphate (β-GP). When such culture-expanded cells were loaded into porous ceramic scaffolds and transplanted into the bone defect of a 69-year-old man, they differentiated into bone tissue. Marrow cells were obtained from the iliac crest and cultured in collagen gels impregnated with rhTGF-β1-F2. Cells were selected under serum-restricted conditions in rhTGF-β1-F2-containing medium for 10 days, expanded in 20% serum for 22 days and osteoinduced for 3 additional days in DEX/β-GP-supplemented medium. We found that the cell number harvested from rhTGF-β1-F2-treated cultures was significantly higher (2.3- to 3-fold) than that from untreated cultures. rhTGF-β1-F2 treatment also significantly increased alkaline phosphatase activity (2.2- to 5-fold) and osteocalcin synthesis, while calcium was only detected in rhTGF-β1-F2-treated cells. Eight weeks after transplantation, most of the scaffold pores were filled with bone and marrow tissue. When we tested the same human cells treated in vitro in a rat model using diffusion chambers, there was subsequent development of cartilage and bone following the subcutaneous transplantation of rhTGF-β1-F2-treated cells. This supports the suggestion that such cells were marrow-derived cells, with chondrogenic and osteogenic potential, whereas the untreated cells were not under the same conditions. The ability for differentiation into cartilage and bone tissues, combined with an extensive proliferation capacity, makes such a marrow-derived stem cell population valuable to induce bone regeneration at skeletal defect sites.