Stem cell-based therapy may be the most promising method to cure skeletal muscle degenerative diseases such as Duchenne muscular dystrophy (DMD) and trauma in the future. Human amniotic fluid is enriched with early-stage stem cells from developing fetuses and these cells have cardiomyogenic potential both in vitro and in vivo. In the present study, we investigated the characteristics of human amniotic fluid-derived AF-type stem (HAF-AFS) cells by flow cytometry, immunofluorescence staining, reverse-transcription polymerase chain reaction, and osteogenic and adipogenic differentiation analysis. After confirming the stemness of HAF-AFS cells, we tested whether HAF-AFS cells could differentiate into skeletal myogenic cells in vitro and incorporate into regenerating skeletal muscle in vivo. By temporary exposure to the DNA demethylation agent 5-aza-2'-deoxycytidine (5-Aza dC) or co-cultured with C2C12 myoblasts, HAF-AFS cells differentiated into skeletal myogenic cells, expressing skeletal myogenic cell-specific markers such as Desmin, Troponin I (Tn I) and α-Actinin. Four weeks after transplantation into cardiotoxin-injured and X-ray-irradiated tibialis anterior (TA) muscles of NOD/SCID mice, HAF-AFS cells survived, differentiated into myogenic precursor cells and fused with host myofibres. The findings that HAF-AFS cells differentiate into myogenic cells in vitro and incorporate in skeletal muscle regeneration in vivo hold the promise of HAF-AFS cell-based therapy for skeletal muscle degenerative diseases.