Human articular cartilage heals poorly in adults and current surgical procedures do not provide long-term repair. Cell therapy and tissue engineering could become the treatment of choice, but suffer a major limitation as chondrocytes in vitro lose the differentiated phenotype. In vivo, the chondrogenic lineage is specified by transcription factor Sox9. Thus, cell-based therapy could be successful if Sox9 expression and chondrogenic commitment of the expanded cells were preserved. To achieve this goal, we developed a serum-free medium that supports cell proliferation and preserves the differentiation potential. Indeed, expression of Sox9 is maintained when the conventionally used serum is substituted for by this defined supplement. Spontaneous cartilage formation after expansion in serum-free medium is obtained in vitro in a high-density pellet culture and confirmed in vivo in a functional assay in immunodeficient mice. By contrast, cells grown in serum lose the expression of Sox9 and fail to reform cartilage both in vitro and in vivo unless they are rescued by chondrogenic inducers such as transforming growth factor beta(1) and dexamethasone. Our data emphasize the importance of the microenvironment in modulating commitment, plasticity, and phenotype of chondrocytes, and provide an experimental system to study their physiological or pathological metabolism in a controlled context.