Tissue engineering approaches for promoting the repair of skeletal tissues have focused on cell-based therapies involving multipotent stromal cells. Recent studies have identified such cells in several tissues in the adult human, including skin, muscle, bone marrow, and subcutaneous fat. This study examined the hypothesis that the infrapatellar fat pad of the adult knee contains progenitor cells that have the ability to differentiate into chondrocytes, osteoblasts, or adipocytes under appropriate culture conditions. Cells isolated from the fat pad stroma had a profile of cell-surface molecules similar but not identical to that of bone marrow-derived mesenchymal stem cells. Using defined culture conditions, fat pad-derived stromal cells were induced to differentiate cells with phenotypic characteristics of: (1) chondrocytes, synthesizing cartilage matrix molecules; (2) adipocytes, producing lipid vacuoles and leptin; or (3) osteoblasts, forming mineralized tissue. The culture conditions also modulated the expression of characteristic gene markers for each lineage. This study supports the hypothesis that multipotent stromal cells are present in many connective tissues in the adult human. Given its location and accessibility, the fat pad may prove to be a potential source of progenitor cells for musculoskeletal tissue engineering.