Mesenchymal stem cells (MSCs) represent the most commonly utilized type of stem cell in clinical applications. However, variability in quality and quantity between different tissue sources and donors presents a significant challenge to their use. Induced pluripotent stem cells (iPSCs) are a promising and abundant alternative source of MSCs, offering a potential solution to the limitations of adult MSCs. Nevertheless, a standardized protocol for the differentiation of iPSCs into iPSC-derived mesenchymal stem cells (iMSCs) has yet to be established, as the existing methods vary significantly in terms of complexity, duration, and outcome. Many straightforward methods induce differentiation by culturing iPSCs in MSC media which are supplemented with fetal bovine serum (FBS) or human platelet lysate (hPL), followed by selection of MSC-like cells by passaging. However, in our hands, this approach yielded inconsistent quality of iMSCs, particularly in terms of osteogenic potential and premature senescence. This study examines the impact of the selective TGF-β inhibitor SB431542 on iMSC differentiation, demonstrating that TGF-β inhibition enhances osteogenic potential and reduces premature senescence. Additionally, we present a reliable, xeno-free method for producing high-quality iMSCs that can be adapted for Good Manufacturing Practice (GMP) compliance, thus enhancing the potential for clinical applications.