Tissue ossification in Peyronie disease (commonly known as Peyronie's disease [PD]), a localized fibrotic lesion within the tunica albuginea (TA) of the penis, may result from osteogenic differentiation of fibroblasts, myofibroblasts, and/or adult stem cells in the TA, and may be triggered by chronic inflammation, oxidative stress, and profibrotic factors like transforming growth factor beta 1 (TGFB1). In this study, we have investigated whether cultures of cells from normal TA and PD plaques undergo osteogenesis, express markers for stem cells, and originate other cell lineages via processes modulated by TGFB1. We found that TA and PD cells in osteogenic medium (OM) expressed osteogenic markers, alkaline phosphatase, and osteopontin and underwent calcification. PD cells, but not TA cells, formed foci in soft agar that were positive for alkaline phosphatase and calcification and expressed the mRNAs for osteoblast-specific factors pleiotrophin and periostin and bone morphogenic protein 2. Both cultures expressed stem cell marker CD34 antigen but not protein tyrosine phosphatase, receptor type c. TA and PD cells expressed smooth-muscle cell markers smoothelin and transgelin. None of the cultures underwent adipogenesis in adipogenic medium. Incubation with TGFB1 increased osteogenesis and myofibroblast differentiation and reduced CD34 antigen expression in both cultures. TA and PD cells modulated the differentiation of the multipotent C3H 10T(1/2) cells in dual cultures, into osteoblasts and myofibroblasts. In conclusion, both TA and PD cultures contain cells, presumably stem cells, that undergo osteogenic and myofibroblast differentiation, and may induce these processes by paracrine interactions. This may explain progression of fibrosis in the PD plaque and its eventual calcification.