Using biodegradable scaffold and a biomimetic perfusion system, our lab has successfully engineered small-diameter vessel grafts using endothelial cells (ECs) and smooth muscle cells (SMCs) obtained from vessels in various species. However, translating this technique into humans has presented tremendous obstacles due to species and age differences. SMCs from elderly persons have limited proliferative capacity and a reduction in collagen production, which impair the mechanical strength of engineered vessels. As an alternative cell source, adult human bone marrow-derived mesenchymal stem cells (hMSCs) were studied for their ability to differentiate into SMCs in culture plates as well as in a bioreactor system. In the former setting, immunofluorescence staining showed that MSCs, after induction for 14 days, expressed smooth muscle alpha-actin (SMA) and calponin, early and mid-SMC phenotypic markers, respectively. In the latter setting, vessel walls were constructed with MSC-derived SMCs. Various factors (i.e., matrix proteins, soluble factors, and cyclic strain) in the engineering system were further investigated for their effects on hMSC cell proliferation and differentiation into SMCs. Based on a screening of multiple factors, the engineering system was optimized by dividing the vessel culture into proliferation and differentiation phases. The vessel walls engineered under the optimized conditions were examined histologically and molecularly, and found to be substantially similar to native vessels. In conclusion, bone marrow-derived hMSCs can serve as a new cell source of SMCs in vessel engineering. Optimization of the culture conditions to drive SMC differentiation and matrix production significantly improved the quality of the hMSC-derived engineered vessel wall.