Stem cell therapy is an attractive approach to bone tissue regeneration. Nitric oxide (NO) has been reported to facilitate osteogenic differentiation of stem cells. To enhance osteogenic differentiation of gingiva-derived mesenchymal stem cells (GMSCs), we designed a method for in situ delivery of exogenous NO to these cells. A NO donor, polyethylenimine/NONOate, was incorporated into poly(lactic-co-glycolic acid) microspheres to deliver NO to the cells for an extended period of time under in vitro culture conditions. A hybrid aggregate of GMSCs and NO-releasing microspheres was prepared by the hanging drop technique. Confocal microscopy revealed homogeneous arrangement of the stem cells and microspheres in heterospheroids. Western blot analysis and live–dead imaging showed no significant change in cell viability. Importantly, the in situ delivery of NO within the heterospheroids enhanced osteogenic differentiation indicated by a 1.2-fold increase in alkaline phosphatase activity and an approximately 10% increase in alizarin red staining. In addition, a low dose of NO promoted proliferation of the GMSCs in this 3D system. Thus, delivery of the NO-releasing microsphers to induce differentiation of stem cells within this three dimensional system may be one of possible strategies to direct differentiation of a stem cell-based therapeutic agent toward a specific lineage.