Isern et al. reveal that mesoderm-derived Nestin-negative (or Nestin−) bone marrow cells (or stroma) give rise to cells that contribute to the formation of cartilage (chondrocytes) and bone (osteoprecursors) in the foetus (top). Shortly after birth, Nestin-negative bone marrow cells lose their ability to generate further mature cells. The neural crest develops from the ectoderm. Nestin-positive (or Nestin+) cells derived from the neural crest give rise to Nestin-positive MSCs (mesenchymal stem cells). The Nestin-positive cells also give rise to Schwann cell precursors, which develop into mature Schwann cells in the bone marrow of newborn mice (bottom). Both populations of cells work together with neural crest-derived sympathetic peripheral neurons to establish a three-part niche for HSCs (haematopoietic stem cells). Unlike Nestin-negative bone marrow cells, Nestin-positive MSCs maintain the potential to develop into other types of cells after birth.