The goals of this study were to determine (a) if melatonin enhances human adult mesenchymal stem cell (hAMSC) differentiation into osteoblasts as assessed by measuring alkaline phosphatase (ALP) enzyme activity, and (b) identify potential signal transduction pathways that mediate this process. ALP activity significantly increased in hAMSCs following a 10-day incubation in osteogenic medium, relative to hAMSCs incubated in basal growth medium alone. Melatonin (50 nM), added in combination with the osteogenic medium, significantly increased ALP activity relative to osteogenic medium alone. Co-exposure of hAMSCs to osteogenic medium supplemented with melatonin and either pertussis toxin or the melatonin receptor antagonists, luzindole or 4P-PDOT (MT2 receptor selective), inhibited the melatonin-induced increase in ALP activity, indicating the involvement of melatonin receptors, in particular, MT2 receptors. Assessment of melatonin receptor function following exposure to osteogenic medium containing either vehicle or melatonin produced dichotomous results. That is, if the differentiation of hAMSCs into an osteoblast was induced by osteogenic medium alone, then 2-[125I]-iodomelatonin binding and melatonin receptor function increased. However, examination of melatonin receptor function following chronic melatonin exposure, an exposure that resulted in a 50% enhancement in ALP activity, revealed that these receptors were desensitized. This was reflected by a complete loss in specific 2-[125I]-iodomelatonin binding as well as melatonin efficacy to inhibit forskolin-induced cAMP accumulation. Further characterization of the mechanisms underlying melatonin's effects on these differentiation processes revealed that MEK (1/2) and ERK (1/2), epidermal growth factor receptors, metalloproteinase and clathrin-mediated endocytosis were essential while PKA was not. Our results are consistent with a role for melatonin in osteoblast differentiation. If so, then, the decrease in plasma melatonin levels observed in humans during late adulthood may further enhance susceptibility to osteoporosis.