Mesenchymal stem cells (MSCs) have great promise in the field of regenerative medicine due to their differentiation potential into several lineages. Besides the bone marrow, MSCs can be obtained from the dermis, which represents a large stem cell reservoir in the skin. Sheep provide an appropriate large animal model for preclinical studies. In this study, we focused on the isolation and characterization of MSCs from sheep dermis as an alternative to bone marrow MSCs (bmMSCs). Primary ovine cells were obtained from the dermis for comparison with bone marrow. CD271(+)/45(-) dermal MSCs (CD271-dMSCs), which were sorted by flow cytometry, and plastic-adherent bmMSCs were examined for morphology, proliferation and senescence-associated β-galactosidase activity in both low and high oxygen conditions. CD271 expression on cultured cells was assessed by flow cytometry. Adipogenic and osteogenic potentials of CD271-dMSCs were evaluated by oil red O and von Kossa staining. Chondrogenic capacity of CD271-dMSCs and CD271(+)/CD45(-) bone marrow cells (CD271-bmMSCs) was detected using immunohistochemistry and measurement of sulfated glycosaminoglycans. The cell proliferation assay demonstrated no significant difference between CD271-dMSCs and bmMSCs under low oxygen conditions. Cultured CD271-dMSCs revealed much more CD271 expression compared to CD271-bmMSCs. CD271-dMSCs and CD271-bmMSCs showed basically similar expression of the cartilage-specific proteins aggrecan and collagen type II, although with a stronger staining in CD271-bmMSC-derived cultures. Remarkably, there was co-expression of CD271 and aggrecan during chondrogenic differentiation, suggesting an involvement of CD271 in chondrogenesis. Based on these findings, CD271-dMSCs might serve as an appropriate alternative cell source in preclinical research.