Metformin, a first‐line antidiabetic drug used by millions of patients, has been shown to have potential osteogenic properties. The present study was performed to test the hypothesis that clinically relevant doses of metformin promote the osteogenic differentiation and mineralization of induced pluripotent stem cell‐derived mesenchymal stem cells (iPSC‐MSCs). iPSC‐MSCs were treated with metformin (10 μm) to assess cell viability, osteogenic differentiation, mineralization and activation of the LKB1/AMP‐activated protein kinase (AMPK) signalling pathway, a surrogate marker of metformin action. To determine its potential application in MSC‐based bone and periodontal tissue engineering, iPSC‐MSCs were also treated with metformin when seeded on to calcium phosphate cement (CPC) scaffolds. Immunoblotting and cellular uptake assays showed that iPSC‐MSCs express functional organic cation transporter‐1 (OCT‐1), a transmembrane protein that mediates the intracellular uptake of metformin. Although metformin treatment did not impair iPSC‐MSC viability, it significantly stimulated alkaline phosphatase activity, enhanced mineralized nodule formation and increased expression of osteogenic markers, including Runt‐related transcription factor 2 (RUNX2) and osterix. Inhibition of LKB1 activity, a common upstream AMPK kinase, markedly reversed metformin‐induced AMPK activation, RUNX2 expression and nuclear localization. Moreover, metformin substantially increased mineralized nodule formation of iPSC‐MSC seeded on CPC scaffolds. Collectively, functional OCT‐expressing iPSC‐MSCs responded to metformin by inducing an osteogenic effect in part mediated by the LKB1/AMPK pathway. Considering the widespread use of metformin in diabetics, this work may lead to novel tissue‐engineering platforms where autogenous OCT‐expressing iPSC‐MSCs might be used to enhance bone and periodontal regeneration in diabetic patients prescribed with daily doses of metformin.