Multipotent stem cells derived from periodontal ligaments (PDLSC) and pulp of human exfoliated deciduous teeth (SHED) represent promising cell sources for bone regeneration. Recent studies have demonstrated that retinoic acid (RA) and dexamethasone (Dex) induce osteogenesis of postnatal stem cells. The objective of this study was to examine the effects of RA and Dex on the proliferation and osteogenic differentiation of SHED and PDLSC and to compare the osteogenic characteristics of SHED and PDLSC under RA treatment. SHED and PDLSC were treated with serum-free medium either alone or supplemented with RA or Dex for 21 days. The proliferation of SHED and PDLSC was significantly inhibited by both RA and Dex. RA significantly upregulated gene expression and the activity of alkaline phosphatase in SHED and PDLSC. Positive Alizarin red and von Kossa staining of calcium deposition was seen on the RA-treated SHED and PDLSC after 21 days of culture. The influences of RA on the osteogenic differentiation of SHED and PDLSC were significantly stronger than with Dex. Supplementation with insulin enhanced RA-induced osteogenic differentiation of SHED. Thus, RA is an effective inducer of osteogenic differentiation of SHED and PDLSC, whereas RA treatment in combination with insulin supplementation might be a better option for inducing osteogenic differentiation. Significantly higher cell proliferation of PDLSC results in greater calcium deposition after 3-week culture, suggesting that PDLSC is a better osteogenic stem cell source. This study provides valuable information for efficiently producing osteogenically differentiated SHED or PDLSC for in vivo bone regeneration.