One of the most fascinating and important aspects of hESC is their ability to differentiate into all cell types. This differentiation only takes place when the correct stimulus is present in the culture media. Although all scientists agree on the potential of hESC, it has also become clear that pluripotency is a double-edged sword: the same plasticity that permits hESC to generate hundreds of different cell types also makes them difficult to control. In this study differentiated hESCs as hEBs in the presence of Activin B, were used with five different concentrations of Activin B (5, 10, 20, 50 and 100 ng/ml) and TGF-beta 1 inhibitor SB-431542 (SB) to induce mesoderm development in hEBs. Activin B induced the expression of endothelial and chondrogenic specific markers such as, CD31, CD34, SOX9 and DLK1 in hEBS. SB treated hEBs showed rapid differentiation with down-regulation of OCT4 and up-regulation of CD56. Activin B induced hEBs were plated and an outgrowth (OG) culture was started with continuous activation with Activin B. The Activin B-OG cells were a homogeneous population with relatively large cobblestone-like cells, this morphology was maintained during sub culturing. SB-OG cells exhibited a heterogeneous population of cells; cell morphologies included long spindle like appearance. Flow cytometric analysis of mesodermal/mesenchymal markers showed that that both Activin-OG and SB-OG were negative for CD34 and positive for CD44, CD63, CD146 and CD166, in addition Activin-OG was positive for Dlk-1. Further analysis clearly showed that Activin-OG cells had a more chondrogenic profile whereas SB-OG was more skeletal muscle phenotype. When the OG cells were injected in combination with HA/TCP into NOD/SCID mice, Activin-OG cells differentiated into hyaline cartilage with prominent lacuna expressing SOX9 and Dlk-1. In contrast to this, when we blocked TGF-beta signalling with SB we observed hESC differentiation to muscle progenitor population with up-regulation in gene expression of known cardiac, smooth and skeletal muscle markers. In addition, the outgrowth and in vivo data revealed that the differentiation has succeeded into muscle cells only. In conclusion we have clearly shown in this study that modulating TGF-beta 1 pathway in hESCs, they differentiate into mesodermal direction however blocking gives more muscle phenotype whereas activation lead to a more chondrogenic direction. Activin B-OG cells tend to be highly positive for Dlk-1 even after in vivo differentiation into hyaline cartilage. In contrast to this, when we blocked TGF-beta signalling with SB we observed hESC differentiation to muscle progenitor population with up-regulation in gene expression of known cardiac, smooth and skeletal muscle markers. In addition, the outgrowth and in vivo data revealed that the differentiation has succeeded into muscle cells only.