Osteosarcoma is the second leading cause of cancer-related death for children and young adults. In this study, we have subcutaneously injected-with and without matrigel-athymic mice (Fox1nu/nu) with human osteosarcoma 3AB-OS pluripotent cancer stem cells (CSCs), which we previously isolated from human osteosarcoma MG63 cells. Engrafted 3AB-OS cells were highly tumorigenic and matrigel greatly accelerated both tumor engraftment and growth rate. 3AB-OS CSC xenografts lacked crucial regulators of beta-catenin levels (E-cadherin, APC, and GSK-3beta), and crucial factors to restrain proliferation, resulting therefore in a strong proliferation potential. During the first weeks of engraftment 3AB-OS-derived tumors expressed high levels of pAKT, beta1-integrin and pFAK, nuclear beta-catenin, c-Myc, cyclin D2, along with high levels of hyperphosphorylated-inactive pRb and anti-apoptotic proteins such as Bcl-2 and XIAP, and matrigel increased the expression of proliferative markers. Thereafter 3AB-OS tumor xenografts obtained with matrigel co-injection showed decreased proliferative potential and AKT levels, and undetectable hyperphosphorylated pRb, whereas beta1-integrin and pFAK levels still increased. Engrafted tumor cells also showed multilineage commitment with matrigel particularly favoring the mesenchymal lineage. Concomitantly, many blood vessels and muscle fibers appeared in the tumor mass. Our findings suggest that matrigel might regulate 3AB-OS cell behavior providing adequate cues for transducing proliferation and differentiation signals triggered by pAKT, beta1-integrin, and pFAK and addressed by pRb protein. Our results provide for the first time a mouse model that recapitulates in vivo crucial features of human osteosarcoma CSCs that could be used to test and predict the efficacy in vivo of novel therapeutic treatments.