The aim of this study was to isolate mesenchymal stem cells (MSCs) from amniotic fluid obtained by second-trimester amniocentesis. A novel two-stage culture protocol for culturing MSCs was developed. Flow cytometry, RT-PCR and immunocytochemistry were used to analyse the phenotypic characteristics of the cultured MSCs. Von Kossa, Oil Red O and TuJ-1 stainings were used to assess the differentiation potentials of MSCs. Amniotic fluid-derived MSCs (AFMSCs) were successfully isolated, cultured and enriched without interfering with the routine process of fetal karyotyping. Flow cytometry analyses showed that they were positive for SH2, SH3, SH4, CD29, CD44 and HLA-ABC (MHC class I), low positive for CD90 and CD105, but negative for CD10, CD11b, CD14, CD34, CD117, HLA-DR, DP, DQ (MHC class II) and EMA. Importantly, a subpopulation of Oct-4-positive cells was detectable in our cultured AFMSCs. Under specific culture conditions, AFMSCs could be induced to differentiate into adipocytes, osteocytes and neuronal cells. We demonstrate that human multipotent MSCs are present in second-trimester amniotic fluid. Considering the great potential of cellular therapy using fetal stem cells and the feasibility of intrauterine fetal tissue engineering, amniotic fluid may provide an excellent alternative source for investigation of human MSCs.