Osteoblastic differentiation of human mesenchymal stem cells (hMSC) in monolayer culture is artefactual, lacking an organized bone-like matrix. We present a highly reproducible microwell protocol generating three-dimensional ex vivo multicellular aggregates of telomerized hMSC (hMSC-telomerase reverse transcriptase (TERT)) with improved mimicry of in vivo tissue-engineered bone. In osteogenic induction medium the hMSC were transitioned with time-dependent specification toward the osteoblastic lineage characterized by production of alkaline phosphatase, type I collagen, osteonectin, and osteocalcin. Introducing a 1-2 mm(3) crystalline hydroxyapatite/beta-tricalcium phosphate scaffold generated osteospheroids with upregulated gene expression of transcription factors RUNX2/CBFA1, Msx-2, and Dlx-5. An organized lamellar bone-like collagen matrix, evident by birefringence of polarized light, was deposited in the scaffold concavities. Here, mature osteoblasts stained positively for differentiated osteoblast markers TAZ, biglycan, osteocalcin, and phospho-AKT. Quantification of collagen birefringence and relatively high expression of genes for matrix proteins, including type I collagen, biglycan, decorin, lumican, elastin, microfibrillar-associated proteins (MFAP2 and MFAP5), periostin, and tetranectin, in vitro correlated predictively with in vivo bone formation. The three-dimensional hMSC-TERT/hydroxyapatite-tricalcium phosphate osteospheroid cultures in osteogenic induction medium recapitulated many characteristics of in vivo bone formation, providing a highly reproducible and resourceful platform for improved in vitro modeling of osteogenesis and refinement of bone tissue engineering.