Bone marrow derived Mesenchymal stem cells (MSCs) were evaluated as an alternative source for tissue engineering of peripheral nerves. Human MSCs were subjected to a series of treatment with a reducing agent, retinoic acid and a combination of trophic factors. This treated MSCs differentiated into Schwann cells were characterized in vitro via flow cytometry analysis and immunocytochemically. In contrast to untreated MSCs, differentiated MSCs expressed Schwann cell markers in vitro, as we confirmed by flow cytometry analysis and immunocytochemically. These results suggest that human MSCs can be induced to be a substitute for Schwann cells that may be applied for nerve regeneration since it is difficult to grow Schwann cells in vitro.