Human osteoblast‐like cells can be readily cultured from explants of trabecular bone, reproducibly expressing the characteristics of cells belonging to the osteoblastic lineage. Dual‐color fluorescence‐activated cell sorting was employed to develop a model of bone cell development in primary cultures of normal human bone cells (NHBCs) based on the cell surface expression of the stromal precursor cell marker STRO‐1 and the osteoblastic marker alkaline phosphatase (ALP). Cells expressing the STRO‐1 antigen exclusively (STRO‐1⁺/ALP⁻), were found to exhibit qualities preosteoblastic in nature both functionally by their reduced ability to form a mineralized bone matrix over time, as measured by calcium release assay, and in the lack of their expression of various bone‐related markers including bone sialoprotein, osteopontin, and parathyroid hormone receptor based on reverse trancriptase polymerase chain reaction (PCR) analysis. The majority of the NHBCs which expressed the STRO‐1⁻/ALP⁺ and STRO‐1⁻/ALP⁻ phenotypes appeared to represent fully differentiated osteoblasts, while the STRO‐1⁺/ALP⁺ subset represented an intermediate preosteoblastic stage of development. All STRO‐1/ALP NHBC subsets were also found to express the DNA‐binding transcription factor CBFA‐1, confirming that these cultures represent committed osteogenic cells. In addition, our primer sets yielded four distinct alternative splice variants of the expected PCR product for CBFA‐1 in each of the STRO‐1/ALP subsets, with the exception of the proposed preosteoblastic STRO‐1⁺/ALP⁻ subpopulation. Furthermore, upon re‐culture of the four different STRO‐1/ALP subsets only the STRO‐1⁺/ALP⁻ subpopulation was able to give rise to all of the four subsets yielding the same proportions of STRO‐1/ALP expression as in the original primary cultures. The data presented in this study demonstrate a hierarchy of bone cell development in vitro and facilitate the study of bone cell differentiation and function.