Among the three embryonic germ layers, the mesoderm is a major source of the mesenchymal precursors giving rise to skeletal and connective tissues, but these precursors have not previously been identified and characterized. Using human embryonic stem cells directed toward mesendodermal differentiation, we show that mesenchymal stem/stromal cells (MSCs) originate from a population of mesodermal cells identified by expression of apelin receptor. In semisolid medium, these precursors form FGF2-dependent compact spheroid colonies containing mesenchymal cells with a transcriptional profile representative of mesoderm-derived embryonic mesenchyme. When transferred to adherent cultures, individual colonies give rise to MSC lines with chondro-, osteo-, and adipogenic differentiation potentials. Although the MSC lines lacked endothelial potential, endothelial cells could be derived from the mesenchymal colonies, suggesting that, similar to hematopoietic cells, MSCs arise from precursors with angiogenic potential. Together, these studies identified a common precursor of mesenchymal and endothelial cells, mesenchymoangioblast, as the source of mesoderm-derived MSCs.