Activation of the protein kinase A (PKA) pathway with dibutyryl cyclic adenosine monophosphate (db-cAMP) was recently shown to enhance osteogenic differentiation of human mesenchymal stromal cells (hMSCs) in vitro and bone formation in vivo. The major drawback of this compound is its inhibitory effect on proliferation of hMSCs. Therefore, we investigated whether fine-tuning of the dose and timing of PKA activation could enhance bone formation even further, with minimum effects on proliferation. To test this, we selected two different PKA activators (8-bromo-cAMP (8-br-cAMP) and forskolin) and compared their effects on proliferation and osteogenic differentiation with those of db-cAMP. We found that all three compounds induced alkaline phosphatase levels, bone-specific target genes, and secretion of insulin-like growth factor-1, although 8-br-cAMP induced adipogenic differentiation in long-term cultures and was thus considered unsuitable for further in vivo testing. All three compounds inhibited proliferation of hMSCs in a dose-dependent manner, with forskolin inhibiting proliferation most. The effect of forskolin on in vivo bone formation was tested by pretreating hMSCs before implantation, and we observed greater amounts of bone using forskolin than db-cAMP. Our data show forskolin to be a novel agent that can be used to increase bone formation and also suggests a role for PKA in the delicate balance between adipogenic and osteogenic differentiation.