Research into skeletal stem cell biology offers significant therapeutic opportunities in the development of bone tissue engineering strategies. The pluripotency of human embryonic stem (ES) cells as well as their potentially unlimited supply makes these cells highly desirable for differentiation to produce functional bone cells (osteoblasts). Equally, cells derived from foetal tissue offer enormous potential for cell based tissue regeneration, however to date there has been little research into the interactions between the two cell types for differentiation purposes. Initial studies characterised the cell populations to be utilised. Foetal cells were expanded in basal conditions from explant cultures of human foetal femurs at 8–12 weeks post conception. Foetal-derived cells expressed type I collagen, alkaline phosphatase and two unique progenitor markers, STRO-1 and 7D4. Expression of STRO-1 in foetal samples ranged from 0.6–12.6% and 7D4 ranged from 0.1-5.1%, and was seen in basal conditions for up to 21 days in culture. Molecular characterisation of the cell fractions showed the STRO-1 positive fraction to express early bone markers, SOX-9 and RUNX-2 and to lack markers of more mature osteogenic cells. Characterisation of the foetal femur derived cells indicated that the cells were suitable for use as a halfway model between embryonic and adult cells in bone development and that the STRO-1 positive cell population found within displayed osteogenic propensity. Human embryonic stem cells were characterised and differentiation studies performed in monolayer culture using single ES cells or by the formation of embryoid bodies (ES cell aggregates). Molecular characterisation showed an increase in BMP-4 expression in both monolayer and 3-D cultures, indicative of mesoderm differentiation. Additionally, foetal cells were co-cultured with human ES cells in both monolayer and 3-D pellets to investigate their potential for differentiation. These studies demonstrated a spatial organisation of the cells as well as a potential inhibition of the foetal cell differentiation by the presence of the ES cells, which was observed in both monolayer and 3-D culture conditions. The use of dielectrophoresis (DEP) as a cell characterisation technique that does not require the use of biochemical markers or tags was utilised. Differences in specific membrane capacitance in MG-63, SAOS-2 and STRO-1 positive cells (from human bone marrow) were observed, a parameter that could be exploited at a later stage to separate the cells from mixed populations in a DEP based sorting device. These studies demonstrate the potential of human ES cells and foetal cells as an alternative cell source in the development of bone tissue engineering strategies.