Osteoarthritis (OA) of the knee is a degenerative joint disease caused by the progressive reduction of the articular cartilage surface that leads to reduced joint function. Cartilage degeneration occurs through gradual loss in extracellular matrix components including type II collagen and proteoglycan. Due to limited inherent self repair capacity of the cartilage, the use of cell-based therapies for articular cartilage regeneration is considered promising. Bone marrow mesenchymal stem cells (BM-MSCs) are multipotent cells and are highly capable of multilineage differentiation which render them valuable for regenerative medicine. In this study, BM-MSCs were isolated from OA patients and were characterized for MSC specific CD surface marker antigens using flowcytometry and their differentiation potential into adipocytes, osteocytes and chondrocytes were evaluated using histological and gene expression studies. BM-MSCs isolated from OA patients showed short spindle shaped morphology in culture and expressed positive MSC related CD markers. They also demonstrated positive staining with oil red O, alizarin red and alcian blue following differentiation into adipocytes, osteocytes and chondrocytes, respectively. In addition, chodrogenic related genes such as collagen type II alpha1, cartilage oligomeric matrix protein, fibromodulin, and SOX9 as well as osteocytic related genes such as alkaline phosphatase, core-binding factor alpha 1, osteopontin and RUNX2 runt-related transcription factor 2 were upregulated following chondrogenic and osteogenic differentiation respectively. We have successfully isolated and characterized BM-MSCs from OA patients. Although BM-MSCs has been widely studied and their potential in regenerative medicine is reported, the present study is the first report in our series of experiments on the BMSCs isolated from OA patients at King Abdulaziz University Hospital, Jeddah, Saudi Arabia.