Background: The mechanism of cadmium induced osteoporosis is not well understood, so in this study, we examined the toxicity of bone marrow mesenchymal stem cell (MSCs) following treatment of rats with CdCl2 in drinking water, to revile the effect of this chemical on differentiation potential of MSCs. Methods: At the end of third passage, MSCs were grown in the osteogenic medium for 21 days. To study the differentiation property the viability, morphology, intracellular calcium, and matrix mineralization via quantitative alizarin red were evaluated. Besides, biochemical parameters including activity of alkaline phosphatase (ALP), aspartate amino transaminase (AST), alanine amino transaminase (ALT) as well as antioxidant enzyme such as superoxide dismutase, catalase, and peroxidase were determined too. In addition, level of lipid peroxidation based on determination of malondialdehyde (MDA) content was studied. Results: The results showed significant reduction in the viability of cells after differentiation compared to control (P<0.05). The treatment of rats caused significant reduction in nuclear diameter. There was significant increase in (ALT) and (AST) activity whereas activity of ALP reduced significantly (P<0.05). The results showed significant reduction in the antioxidant enzyme activity and increases in (MDA). The mean bone matrix mineralization and intracellular calcium content of the MSCs also reduced significantly (P<0.05). Conclusions: Oral consumption of cadmium affects osteogenic differentiation potential of MSCs via membrane damage, reduction of calcium deposition and metabolic changes. Thus, it might be considered as a probable factor involve in cadmium related osteoporosis.