The purpose of this study was to examine the in vitro and in vivo osteogenic potential of human induced pluripotent stem cells (hiPSCs) against that of human bone marrow mesenchymal stem cells (hBMMSCs). Embryoid bodies (EBs), which were formed from undifferentiated hiPSCs, were dissociated into single cells and underwent osteogenic differentiation using the same medium as hBMMSCs for 14 days. Osteoinduced hiPSCs were implanted on the critical-size calvarial defects and long bone segmental defects in rats. The healing of defects was evaluated after 8 weeks and 12 weeks of implantation, respectively. Osteoinduced hiPSCs showed relatively lower and delayed in vitro expressions of the osteogenic marker COL1A1 and bone sialoprotein, as well as a weaker osteogenic differentiation through alkaline phosphatase staining and mineralization through Alizarin red staining compared with hBMMSCs. Calvarial defects treated with osteoinduced hiPSCs had comparable quality of new bone formation, including full restoration of bone width and robust formation of trabeculae, to those treated with hBMMSCs. Both osteoinduced hiPSCs and hBMMSCs persisted in regenerated bone after 8 weeks of implantation. In critical-size long bone segmental defects, osteoinduced hiPSC treatment also led to healing of segmental defects comparable to osteoinduced hBMMSC treatment after 12 weeks. In conclusion, despite delayed in vitro osteogenesis, hiPSCs have an in vivo osteogenic potential as good as hBMMSCs.