Gingival tissue-derived mesenchymal stem cells (MSCs) were recently identified and characterized as having multipotential differentiation and immunomodulatory properties in vitro and in vivo, and they represent new postnatal stem cell types for cytotherapy and regenerative medicine. However, the utility of gingival MSCs (GMSCs) as alternatives to periodontal ligament stem cells (PDLSCs), which have been demonstrated to be effective but with limited cell availability and reduced clinical feasibility, for periodontal regeneration in a previously diseased/inflamed environment remains obscure. In this study, patient-matched human GMSCs and PDLSCs were evaluated in terms of their colony-forming ability, proliferative capacity, cell surface epitopes, multi-lineage differentiation potentials, and related gene expression when incubated in different designed culture conditions, with or without the presence of inflammatory cytokines. An in vivo ectopic transplantation model using transplants from inflammatory cytokine-treated or untreated cells was applied to assess bone formation. We found that cells derived from both tissues expressed MSC markers, including CD146, CD105, CD90, CD29, and STRO-1. Both cells successfully differentiated under osteogenic, adipogenic, and chondrogenic microenvironments; PDLSCs displayed a more effective differentiation potential in all of the incubation conditions compared to GMSCs (P < 0.01). Although inflammatory cytokine-treated GMSCs and PDLSCs are inferior to normally cultured, patient and tissue-matched cells in terms of their osteogenic capacity and regenerative potential (P < 0.05), they retain the capacity for osteoblastic and adipose differentiation, as well as ectopic bone formation, similar to what has been demonstrated for other MSCs. Interestingly, GMSCs exhibited fewer inflammation-related changes in terms of osteogenic potential in vitro and bone formation in vivo compared to PDLSCs (P < 0.01). These results suggest that both gingiva and PDL tissues are putative cell sources for future cytotherapeutic applications. Whether GMSCs act as an adjunctive or alternative cell source for cytotherapy of inflammatory periodontal disease warrants further investigation.