Age-related decrease in bone formation is well described. However, the cellular causes are not known. Thus, we have established cultures of bone marrow stromal cells (MSC) from young (aged 18–29 years, n = 6) and old (aged 68–81 years, n = 5) donors. MSC were serially passaged until reaching maximal life span. Cell growth, markers of cellular senescence, and osteogenic and adipogenic potential were determined in early-passage and late-passage cells established from young and old donors. MSC from old donors exhibited a decreased maximal life span compared with cells from young donors (24 ± 11 population doublings [PD] vs 41 ± 10 PD, P < 0.05) and mean PD rate was lower in old donor cells (0.05 ± 0.02 PD/day) compared with young donor cells (0.09 ± 0.02 PD/day) (P < 0.05). No differences were detected in number of senescence-associated β-galactosidase positive (SA β-gal⁺) cells and mean telomere length in early-passage cells obtained from young and old donors. However, MSC from old donors exhibited accelerated senescence evidenced by increased number of SA β-gal⁺ cells per PD as compared with young (4% per PD vs 0.4% per PD, respectively). MSC from young and old donors were able to form similar amounts of mineralized matrix in vitro and of normal lamellar bone in vivo. In adipogenic medium similar numbers of adipocytes formed in cultures of young and old donors. In conclusion, aging is associated with decreased proliferative capacity of osteoprogenitor cells, suggesting that decreased osteoblastic cell number, and not function, leads to age-related decrease in bone formation.