Directing differentiation of human embryonic stem cells (hESCs) into specific cell types using an easy and reproducible protocol is a prerequisite for the clinical use of hESCs in regenerative-medicine procedures. Here, we report a protocol for directing the differentiation of hESCs into mesenchymal progenitor cells. We demonstrate that inhibition of transforming growth factor beta (TGF-beta)/activin/nodal signaling during embryoid body (EB) formation using SB-431542 (SB) in serum-free medium markedly upregulated paraxial mesodermal markers (TBX6, TBX5) and several myogenic developmental markers, including early myogenic transcriptional factors (Myf5, Pax7), as well as myocyte-committed markers [NCAM, CD34, desmin, MHC (fast), alpha-smooth muscle actin, Nkx2.5, cTNT]. Continuous inhibition of TGF-beta signaling in EB outgrowth cultures (SB-OG) enriched for myocyte progenitor cells; markers were PAX7(+) (25%), MYOD1(+) (52%), and NCAM(+) (CD56) (73%). DNA microarray analysis revealed differential upregulation of 117 genes (>2-fold compared with control cells) annotated to myogenic development and function. Moreover, these cells showed the ability to contract (80% of the population) and formed myofibers when implanted intramuscularly in vivo. Interestingly, SB-OG cells cultured in 10% fetal bovine serum (FBS) developed into a homogeneous population of mesenchymal progenitors that expressed CD markers characteristic of mesenchymal stem cells (MSCs): CD44(+) (100%), CD73(+) (98%), CD146(+) (96%), and CD166(+) (88%) with the ability to differentiate into osteoblasts, adipocytes, and chondrocytes in vitro and in vivo. Furthermore, microarray analysis of these cells revealed downregulation of genes related to myogenesis: MYH3 (-167.9-fold), ACTA1 (-161-fold), MYBPH (-139-fold), ACTC (-100.3-fold), MYH8 (-45.5-fold), and MYOT (-41.8-fold) and marked upregulation of genes related to mesoderm-derived cell lineages. In conclusion, our data provides a simple and versatile protocol for directing the differentiation of hESCs into a myogenic lineage and then further into mesenchymal progenitors by blocking the TGF-beta signaling pathway.