Several studies have suggested that bone marrow stromal steam cells (BMSC) exist in a quiescent state (G0) within the in vivo niche; however, an explicit analysis of the biology of G0 state-BMSC has not been reported. We hypothesized that induction of G0 in BMSC might enhance their stem cell properties. Thus, we induced quiescence in BMSC in vitro by (a) suspension culture in a viscous medium or (b) culture on soft polyacrylamide substrate; and examined their molecular and functional phenotype. Induction of G0 was confirmed by bromo-deoxyuridine (BrdU) labelling and analysis of cell cycle gene expression. Upon reactivation and re-entry into cell cycle, G0 state-BMSC exhibited enhanced clonogenic self-renewal, preferential differentiation into osteoblastic rather than adipocytic cells and increased ectopic bone formation when implanted subcutaneously in vivo in immune-deficient mice, compared to asynchronous proliferating (pre-G0) BMSC. Global gene expression profiling revealed reprogramming of the transcriptome during G0 state including significant alterations in relevant pathways and expression of secreted factors, suggesting altered autocrine and paracrine signaling by G0 state-BMSC and a possible mechanism for enhanced bone formation. G0 state-BMSC might provide a clinically relevant model for understanding the in vivo biology of BMSC.