Successful cell therapy will depend on the ability to monitor transplanted cells. With cell labeling, it is important to demonstrate efficient long term labeling without deleterious effects on cell phenotype and differentiation capacity. We demonstrate long term (7 weeks) retention of superparamagnetic iron oxide particles (SPIO) by mesenchymal stem cells (MSCs) in vivo, detectable by MRI. In vitro, multilineage differentiation (osteogenic, chondrogenic and adipogenic) was demonstrated by histological evaluation and molecular analysis in SPIO labeled and unlabeled cells. Gene expression levels were comaparable to unlabeled controls in adipogenic and chondrogenic conditions however not in the osteogenic condition. MSCs seeded into a scaffold for 21 days and implanted subcutaneously into nude mice for 4 weeks, showed profoundly altered phenotypes in SPIO labeled samples compared to implanted unlabeled control scaffolds, indicating chondrogenic differentiation. This study demonstrates long term MSC traceability using SPIO and MRI, uninhibited multilineage MSC differentiation following SPIO labeling, though with subtle but significant phenotypical alterations.