Purpose Osteogenesis imperfecta is a serious genetic disorder that results from improper type I collagen production. We aimed to evaluate whether bone marrow stromal cells (BMSC) delivered locally into femurs were able to engraft, differentiate into osteoblasts, and contribute to formation of normal bone matrix in the osteogenesis imperfect murine (oim) model. Methods Donor BMSCs from bone-specific reporter mice (Col2.3GFP) were expanded in vitro and transplanted into the femoral intramedullary cavity of oim mice. Engraftment was evaluated after 4 weeks. Results We detected differentiation of donor BMSCs into Col2.3GFP+ osteoblasts and osteocytes in cortical and trabecular bone of transplanted oim femurs. New bone formation was detected by deposition of dynamic label in the proximity to the Col2.3GFP+ osteoblasts, and new bone showed more organized collagen structure and expression of type I α2 collagen. Col2.3GFP cells were not found in the contralateral femur indicating that transplanted osteogenic cells did not disseminate by circulation. No osteogenic engraftment was observed following intravenous transplantation of BMSCs. BMSC cultures derived from transplanted femurs showed numerous Col2.3GFP+ colonies, indicating the presence of donor progenitor cells. Secondary transplantation of cells recovered from recipient femurs and expanded in vitro also showed Col2.3GFP+ osteoblasts and osteocytes confirming the persistence of donor stem/progenitor cells. Conclusion We show that BMSCs delivered locally in oim femurs are able to engraft, differentiate into osteoblasts and osteocytes and maintain their progenitor potential in vivo. This suggests that local delivery is a promising approach for introduction of autologous MSC in which mutations have been corrected.