Mesenchymal stem cells (MSCs) play a crucial role in tissue repair by secretion of tissue nutrient factors such as hepatocyte growth factor (HGF).  However, studies examining the effects of HGF on the proliferation and differentiation of MSCs used different concentrations of HGF and reported conflicting conclusions.  This study aimed to determine the mechanisms by which different concentrations of HGF regulate MSC proliferation and osteogenic differentiation, and validate the mechanism in an animal model of early stage avascular necrosis of femoral head (ANFH).  Our results demonstrate that a low concentration of HGF (20 ng/mL) preferentially promotes MSC osteogenic differentiation through increased c-Met expression and phosphorylation, Akt pathway activation, and increased expression of p27, Runx2, and Osterix.  In contrast, a high concentration of HGF (100 ng/mL) strongly induced proliferation by inducing strong activation of the ERK1/2 signaling pathway.  As validated by animal experiments, high localized expression of HGF achieved by transplantation of HGF transgenic MSCs into ANFH rabbits increased the number of MSCs.  Subsequently, two weeks after transplantation, HGF levels decreased and MSCs differentiated into osteoblasts and resulted in efficient tissue repair.  Our results demonstrate that sequential concentration changes in HGF control the proliferation and osteogenic differentiation of MSCs in vivo.  This phenomenon can be exploited therapeutically to induce bone regeneration and, in turn, improve the efficacy of pharmacological intervention for ANFH treatment.