Umbilical cord mesenchymal stem cells (UC-MSCs) show properties similar to bone marrow mesenchymal stem cells (BM-MSCs), although controversial data exist regarding their osteogenic potential. We prepared clinical-grade UC-MSCs from Wharton's Jelly and we investigated if UC-MSCs could be used as substitutes for BM-MSCs in muscoloskeletal regeneration as a more readily available and functional source of MSCs. UC-MSCs were loaded onto scaffolds and implanted subcutaneously (ectopically) and in critical-sized calvarial defects (orthotopically) in mice. For live cell-tracking experiments, UC-MSCs were first transduced with the luciferase gene. Angiogenic properties of UC-MSCs were tested using the mouse metatarsal angiogenesis assay. Cell secretomes were screened for the presence of various cytokines using an array assay. Analysis of implanted scaffolds showed that UC-MSCs, contrary to BM-MSCs, remained detectable in the implants for 3 weeks at most and did not induce bone formation in an ectopic location. Instead, they induced a significant increase of blood vessel ingrowth. In agreement with these observations, UC-MSC-conditioned medium presented a distinct and stronger proinflammatory/chemotactic cytokine profile than BM-MSCs and a significantly enhanced angiogenic activity. When UC-MSCs were orthotopically transplanted in a calvarial defect, they promoted increased bone formation as well as BM-MSCs. However, at variance with BM-MSCs, the new bone was deposited through the activity of stimulated host cells, highlighting the importance of the microenvironment on determining cell commitment and response. Therefore, we propose, as therapy for bone lesions, the use of allogeneic UC-MSCs by not depositing bone matrix directly, but acting through the activation of endogenous repair mechanisms.