The invention provides methods and compositions for differentiating stromalcells from adipose tissue into cells having osteoblastic properties, andmethods for improving a subject's bone structure. The methods compriseculturing stromal cells from adipose tissue in .beta.-glycerophosphate andascorbic acid and/or ascorbate-2-phosphate for a time sufficient to allowdifferentiation of said cells into osteoblasts. Such methods and compositionsare useful in the production of osteoblasts for autologous transplantationinto bone at a surgical site or injury. The compositions comprise adiposestromal cells, a medium capable of supporting the growth of fibroblasts andamounts of .beta.-glycerophosphate and ascorbic acid and/or ascorbic-2-phosphate sufficient to induce the differentiation of said stromal cells intoosteoblasts. The invention further provides methods of identifying compoundsthat effect osteoblasts differentiation. Such compounds are useful in thestudy of bone development and in the treatment of bone disorders, includingbone fractures and osteoporosis.