Purpose Glioblastoma (GBM) is the most common adult primary malignant intracranial cancer. It is associated with poor outcomes due to its invasiveness and resistance to multimodal therapies. Human adipose-derived mesenchymal stem cells (hAMSCs) are a potential treatment because of their tumor tropism, ease of isolation, and ability to be engineered. In addition, bone morphogenetic protein 4 (BMP4) has tumor-suppressive effects on GBM and GBM brain tumor initiating cells (BTICs), but is difficult to deliver to brain tumors. We sought to engineer BMP4-secreting hAMSCs (hAMSCs-BMP4) and evaluate their therapeutic potential on GBM. Experimental Design The reciprocal effects of hAMSCs on primary human BTIC proliferation, differentiation, and migration were evaluated in vitro. The safety of hAMSC use was evaluated in vivo by intracranial co-injections of hAMSCs and BTICs in nude mice. The therapeutic effects of hAMSCs and hAMSCs-BMP4 on the proliferation and migration of GBM cells as well as the differentiation of BTICs, and survival of GBM-bearing mice were evaluated by intracardiac injection of these cells into an in vivo intracranial GBM murine model. Results hAMSCs-BMP4 targeted both the GBM tumor bulk and migratory GBM cells, as well as induced differentiation of BTICs, decreased proliferation, and reduced the migratory capacity of GBMs in vitro and in vivo. In addition, hAMSCs-BMP4 significantly prolonged survival in a murine model of GBM. We also demonstrate that the use of hAMSCs in vivo is safe. Conclusions Both unmodified and engineered hAMSCs are non-oncogenic and effective against GBM, and hAMSCs-BMP4 are a promising cell-based treatment option for GBM.