Adult mesenchymal stem cells (MSCs) derived from bone marrow contribute to the regeneration of multiple types of mesenchymal tissues. Here we describe the functional role of a novel form of cross-talk between the transforming growth factor beta1 (TGF-beta1) and Wnt signaling pathways in regulating the activities of human MSCs. We show that TGF-beta1 induces rapid nuclear translocation of beta-catenin in MSCs in a Smad3-dependent manner. Functionally, this pathway is required for the stimulation of MSC proliferation and the inhibition of MSC osteogenic differentiation by TGF-beta1, likely through the regulation of specific downstream target genes. These results provide evidence for a new mode of cooperation between the TGF-beta and Wnt signaling pathways in this specific cellular context and suggest a potentially important role for this distinct signaling pathway in the control of self-renewal and differentiation of a specific type of MSCs.