Mesenchymal stem cells can give rise to several cell types, but varying results depending on isolation methods and tissue source have led to controversies about their usefulness in clinical medicine. Here we show that vascular endothelial cells can transform into multipotent stem-like cells by an activin-like kinase-2 (ALK2) receptor-dependent mechanism. In lesions from individuals with fibrodysplasia ossificans progressiva (FOP), a disease in which heterotopic ossification occurs as a result of activating ALK2 mutations, or from transgenic mice expressing constitutively active ALK2, chondrocytes and osteoblasts expressed endothelial markers. Lineage tracing of heterotopic ossification in mice using a Tie2-Cre construct also suggested an endothelial origin of these cell types. Expression of constitutively active ALK2 in endothelial cells caused endothelial-to-mesenchymal transition and acquisition of a stem cell-like phenotype. Similar results were obtained by treatment of untransfected endothelial cells with the ligands transforming growth factor-β2 (TGF-β2) or bone morphogenetic protein-4 (BMP4) in an ALK2-dependent manner. These stem-like cells could be triggered to differentiate into osteoblasts, chondrocytes or adipocytes. We suggest that conversion of endothelial cells to stem-like cells may provide a new approach to tissue engineering.