The use of tendon-derived stem cells (TDSCs) as a cell source for musculoskeletal tissue engineering has not been compared with that of bone marrow stromal cells (BMSC). This study compared the mesenchymal stem cell (MSC) and embryonic stem cells (ESC) markers, clonogenicity, proliferative capacity, and multilineage differentiation potential of rat TDSC and BMSC in vitro. The MSC and ESC marker profiles of paired TDSC and BMSC were compared using flow cytometry and quantitative real-time polymerase chain reaction (qRT-PCR), respectively. Their clonogenicity and proliferative capacity were compared using colony-forming and 5-bromo-2'-deoxyuridine assays, respectively. The expression of tenogenic, osteogenic, and chondrogenic markers at basal state were examined using qRT-PCR. Their osteogenic, chondrogenic, and adipogenic differentiation potentials were compared using standard assays. TDSC and BMSC showed similar expression of CD90 and CD73. TDSC expressed higher levels of Oct4 than BMSC. TDSC exhibited higher clonogenicity, proliferated faster, and expressed higher tenomodulin, scleraxis, collagen 1 α 1 (Col1A1), decorin, alkaline phosphatase, Col2A1, and biglycan messenger RNA levels than BMSC. There was higher calcium nodule formation and osteogenic marker expression in TDSC than BMSC upon osteogenic induction. More chondrocyte-like cells and higher glycosaminoglycan deposition and chondrogenic marker expression were observed in TDSC than BMSC upon chondrogenic induction. There were more oil droplets and expression of an adipogenic marker in TDSC than BMSC upon adipogenic induction. TDSC expressed higher Oct4 levels, which was reported to positively regulate mesendodermal lineage differentiation, showed higher clonogenicity and proliferative capacity, and had greater tenogenic, osteogenic, chondrogenic, and adipogenic markers and differentiation potential than BMSC. TDSC might be a better cell source than BMSC for musculoskeletal tissue regeneration.