MicroRNAs (miRs) play a pivotal role in a variety of biological processes including stem cell differentiation and function. Human foetal femur derived skeletal stem cells (SSCs) display enhanced proliferation and multipotential capacity indicating excellent potential as candidates for tissue engineering applications. This study has examined the expression and role of miRs in human foetal femur derived SSC differentiation along chondrogenic and osteogenic lineages. Cells isolated from the epiphyseal region of the foetal femur expressed higher levels of genes associated with chondrogenesis while cells from the foetal femur diaphyseal region expressed higher levels of genes associated with osteogenic differentiation. In addition to the difference in osteogenic and chondrogenic gene expression, epiphyseal and diaphyseal cells displayed distinct miRs expression profiles. miR-146a was found to be expressed by human foetal femur diaphyseal cells at a significantly enhanced level compared to epiphyseal populations and was predicted to target various components of the TGF-β pathway. Examination of miR-146a function in foetal femur cells confirmed regulation of protein translation of SMAD2 and SMAD3, important TGF-β and activin ligands signal transducers following transient overexpression in epiphyseal cells. The down-regulation of SMAD2 and SMAD3 following overexpression of miR-146a resulted in an up-regulation of the osteogenesis related gene RUNX2 and down-regulation of the chondrogenesis related gene SOX9. The current findings indicate miR-146a plays an important role in skeletogenesis through attenuation of SMAD2 and SMAD3 function and provide further insight into the role of miRs in human skeletal stem cell differentiation modulation with implications therein for bone reparation.