The MET oncogene is aberrantly overexpressed in human osteosarcomas. We have previously converted primary cultures of human bone-derived cells into osteosarcoma cells by overexpressing MET. To determine whether MET transforms mesenchymal stem cells or committed progenitor cells, here we characterize distinct MET overexpressing osteosarcoma (MET-OS) clones using genome-wide expression profiling, cytometric analysis, and functional assays. All the MET-OS clones consistently display mesenchymal and stemness markers, but not most of the mesenchymal-stem cell-specific markers. Conversely, the MET-OS clones express genes characteristic of early osteoblastic differentiation phases, but not those of late phases. Profiling of mesenchymal stem cells induced to differentiate along osteoblast, adipocyte, and chondrocyte lineages confirms that MET-OS cells are similar to cells at an initial phase of osteoblastic differentiation. Accordingly, MET-OS cells cannot differentiate into adipocytes or chondrocytes, but can partially differentiate into osteogenic-matrix-producing cells. Moreover, in vitro MET-OS cells form self-renewing spheres enriched in cells that can initiate tumors in vivo. MET kinase inhibition abrogates the self-renewal capacity of MET-OS cells and allows them to progress toward osteoblastic differentiation. These data show that MET initiates the transformation of a cell population that has features of osteo-progenitors and suggest that MET regulates self-renewal and lineage differentiation of osteosarcoma cells. ß