The loss of regenerative capacity of bone, from fetal to adult to aged animals, has been attributed not only to a decline in the function of cells involved in bone formation but also to alterations in the bone microenvironment that occur through development and aging, including extracellular matrix (ECM) composition and growth/trophic factor content. In the development of novel treatments for bone repair, one potential therapeutic goal is the restoration of a more regenerative microenvironment, as found during embryonic development. One approach to creating such a microenvironment is through the use of stem cells. In addition to serving as a differentiated cell source, pluripotent stem cells, such as embryonic stem cells (ESCs), may possess the unique potential to modulate tissue environments via local production of ECM and growth factors. ESC-produced factors may be harnessed and delivered to promote functional tissue regeneration. Such an approach to generate a naturally derived, acelluar therapy has been employed successfully to deliver osteoinductive factors found within adult bone, in the form of demineralized bone matrix (DBM), but the development of treatments derived instead from developing, more regenerative tissues or cells remains attractive. Furthermore, the derivation of regenerative materials from an ESC source also presents the added benefit of eliminating donor to donor variability of adult, cadaveric tissue derived materials, such as DBM. Thus, the objective of this project was to examine the osteoinductive potential harbored within the embryonic microenvironment, in vitro and in vivo. The osteogenic differentiation of mouse ESCs as embryoid bodies (EBs) was evaluated in response to phosphate treatment, in vitro, including osteoinductive growth factor production. The osteoinductivity of EB-derived material (EBM) was then compared to that of adult tissue-derived DBM, in vivo. Phosphate treatment enhanced osteogenic differentiation of EBs. EBM derived from phosphate treated EBs retained bioactive, osteoinductive factors and induced new bone formation, demonstrating that the microenvironment within osteogenic EBs can be harnessed in an acellular material to yield in vivo osteoinductivity. This work not only provides new insights into the dynamic microenvironments of differentiating stem cells but also establishes an approach for the development of an ESC-derived, tissue specific therapy.Ph.D