Abstract: Human embryonic stem cells (hESC) have the potential to produce all of the cells in the body. They are also able to self-renew indefinitely, sparking the hope they could be used as a source for large scale production of therapeutic cell lines. The present invention relates to a monolayer differentiation culture system that induces hESC (WA09 and BG01) to form epithelial sheets with mesodermal gene expression patterns (BMP4, RUNX1, GAT A4). These E-cadherin+ CD90lovv cells then undergo apparent epithelial-mesenchymal transformation (EMT) for the derivation of mesenchymal progenitor cells (hES-MC) that by flow cytometry are negative for hematopoietic (CD34, CD45 and CD 133) and endothelial (CD31 and CD 146) markers, but positive for markers associated with mesenchymal stem cells (MSC) (CD73, CD90, CD105 and CD166).