Mammalian high-temperature requirement serine protease A1 (HTRA1) is a secreted member of the trypsin family of serine proteases which can degrade a variety of bone matrix proteins and as such has been implicated in musculoskeletal development. In this study, we have investigated the role of HTRA1 in mesenchymal stem cell (MSC) osteogenesis and suggest a potential mechanism through which it controls matrix mineralization by differentiating bone-forming cells. Osteogenic induction resulted in a significant elevation in the expression and secretion of HTRA1 in MSCs isolated from human bone marrow-derived MSCs (hBMSCs), mouse adipose-derived stromal cells (mASCs), and mouse embryonic stem cells. Recombinant HTRA1 enhanced the osteogenesis of hBMSCs as evidenced by significant changes in several osteogenic markers including integrin-binding sialoprotein (IBSP), bone morphogenetic protein 5 (BMP5), and sclerostin, and promoted matrix mineralization in differentiating bone-forming osteoblasts. These stimulatory effects were not observed with proteolytically inactive HTRA1 and were abolished by small interfering RNA against HTRA1. Moreover, loss of HTRA1 function resulted in enhanced adipogenesis of hBMSCs. HTRA1 Immunofluorescence studies showed colocalization of HTRA1 with IBSP protein in osteogenic mASC spheroid cultures and was confirmed as being a newly identified HTRA1 substrate in cell cultures and in proteolytic enzyme assays. A role for HTRA1 in bone regeneration in vivo was also alluded to in bone fracture repair studies where HTRA1 was found localized predominantly to areas of new bone formation in association with IBSP. These data therefore implicate HTRA1 as having a central role in osteogenesis through modification of proteins within the extracellular matrix. STEM Cells2012;30:2271-2282.