Mesenchymal stem cells are multipotential cells capable of differentiating into osteoblasts, chondrocytes, adipocytes, tenocytes, and myoblasts. Wharton’s jelly consists of stem cells that are a rich source of primitive multipotent mesenchymal cells. Demineralized bone matrix (DBM) has been widely utilized as a biomaterial to promote new bone formation. We isolate and characterize umbilical cord Wharton’s Jelly-derived mesenchymal stem (UCMS) cells derived from Wharton’s jelly and examine the biological activity of DBM in this cell line. Osteoblast differentiation of the UCMS cells was determined using alkaline phosphatase (ALP) activity assay. To examine differential gene expression during osteogenic differentiation, total RNA was isolated from UCMS cells in the absence or presence of DBM on day7 and analyzed using osteogenesis cDNA gene array. The selected genes were verified using reverse transcriptase-polymerase chain reaction (RT-PCR) analyses. Wharton’s jelly derived cells could differentiate along an osteogenic lineage after treatment of DBM. The ALP activity assay showed that human UCMS cells could differentiate into osteogenic lineage. Gene expression of human UCMS cells treated with DBM for 7 days was analyzed by using cDNA array and RT-PCR analyses. We found that expression of RUNX2 and SMAD2 was upregulated whereas SMAD7 expression was downregulated as confirmed by RT-PCR. UCMS cells from a Wharton’s jelly of human umbilical cord could express osteogenesis genes for treatment with DBM. Wharton’s jelly from umbilical cord is a new source of mesenchymal stem cells that are readily available for application to bone tissue engineering.