Grafting material for vaginal reconstruction commonly includes the bowel, peritoneum, skin, and amniotic membrane. Bone marrow mesenchymal stem cells (MSCs) have the potential of multilineage differentiation into a variety of cells and have been widely explored in tissue engineering. In the current study, we examined whether MSCs could be differentiated to vaginal epithelial cells (VECs) upon co-culturing with VECs. We also examined whether Wnt/-catenin signaling pathway is implicated in such differentiation. Co-culture of MSCs with VECs using a transwell insert system (with no direct contact) induced the expression of VECs marker AE1/AE3 in MSCs. MSCs combined with small intestinal submucosa (SIS) scaffold were implanted in place of the native vagina in rats to observe the implications for vaginal reconstruction in vivo. Anatomic repair of neovagina was assessed by histological staining for H/E and Masson's Trichrome. GSK-3 and -catenin, main members of Wnt/-catenin signaling pathway, in MSCs were increased upon co-culturing with VECs. Exposure of co-cultured MSCs to a Wnt/-catenin signaling activator, lithium chloride (LiCl, 20 mu M) increased phosphorylated GSK-3 and -catenin and enhanced expression of AE1/AE3. In vivo-grafted cells displayed significant matrix infiltration and expressed epithelial markers in neovagina. These findings suggest that MSCs could acquire the phenotype of VECs when co-cultured with VECs, possibly via activation of Wnt/-catenin signaling. MSCs provide an alternative cell source for potential use in vaginal tissue engineering.