This study focused on the characterization of stem cells from human exfoliated deciduous teeth (SHED) in comparison with dental pulp stem cells (DPSCs) to certify SHED as a key element in tissue engineering. In the present study, SHED and DPSCs were assayed for their cell surface antigens and proliferation by measuring the cell cycles, growth rates, Ki67-positive efficiencies, and colony-forming units (CFUs). The evaluation of multi-differentiation was performed using alizarin red and oil red O and real-time PCR in vitro. The mineralization capability of the cells was examined in vivo by implanting with ceramic bovine bone (CBB) into subcutaneous of immunocompromised mice for 8weeks. A three-dimensional pellet cultivation system is proposed for SHED and DPSCs to recreate the biological microenvironment that is similar to that of a regenerative milieu. SHED showed a higher proliferation rate and differentiation capability in comparison with DPSCs in vitro, and the results of the in vivo transplantation suggest that SHED have a higher capability of mineralization than the DPSCs. The mRNA expression levels of inflammatory cytokines, including matrix metalloproteinase-1 (MMP1), tissue inhibitors of metalloproteinase-1 (TIMP1), matrix metalloproteinase-2 (MMP2), tissue inhibitors of metalloproteinase-2 (TIMP2) and interleukin-6 (IL-6) were higher in SHED than that in DPSCs. In addition, the expression levels of Col I and proliferating cell nuclear antigen (PCNA) in SHED sheets were significantly higher than those in DPSCs sheets. This study systematically demonstrated the differences in the growth and differentiation characteristics between SHED and DPSCs. Consequently, SHED may represent a suitable, accessible and potential alternative source for regenerative medicine and therapeutic applications.