With an aging population, skeletal fractures are increasing in incidence, including the typical closed and the less common open fractures in normal bone, as well as fragility fractures in patients with osteoporosis. For the older age group, there is an urgent unmet need to induce predictable bone formation as well as improve implant fixation in situations such as hip joint replacement. Using a murine model of slow-healing fractures, we have previously shown that coverage of the fracture with muscle accelerated fracture healing and increased union strength. Here, we show that cells from muscle harvested after 3 d of exposure to an adjacent fracture differentiate into osteoblasts and form bone nodules in vitro. The osteogenic potential of these cells exceeds that of adipose and skinderived stromal cells and is equivalent to bone marrow stromal cells. Supernatants from human fractured tibial bone fragments promote osteogenesis and migration of muscle-derived stromal cells (MDSC) in vitro. The main factor responsible for this is TNF-α, which promotes first MDSC migration, then osteogenic differentiation at low concentrations. However, TNF-α is inhibitory at high concentrations. In our murine model, addition of TNF-α at 1 ng/mL at the fracture site accelerated healing. These data indicate that manipulating the local inflammatory environment to recruit, then differentiate adjacent MDSC, may be a simple yet effective way to enhance bone formation and accelerate fracture repair. Our findings are based on a combination of human specimens and an in vivo murine model and may, therefore, translate to clinical care.