We report herein the first known incidence of the emergence of borrelial arthritis following autologous chondrocyte transplantation for repair of a cartilage defect. The patient had no recent manifestation of Lyme borreliosis, but 15 years earlier had had an expanding erythematous lesion after a tick bite. The current infection resulted in massive joint swelling, elevated body temperature, dissemination of the graft, and transplant failure. Results of routine bacteriologic studies were negative. A diagnosis of Lyme arthritis was first considered following the detection of Borrelia-specific serum antibodies. Additional evidence was provided when borrelial DNA sequences were detected in the synovial fluid through polymerase chain reaction. The diagnosis was confirmed by culture of Borrelia burgdorferi from the synovial fluid. The possibility of a dormant borrelial infection should be considered in patients who undergo repair of cartilage defects with autologous chondrocyte transplantation. We recommend that synovial fluid and joint tissue be screened for the presence of viable Borrelia before transplantation of an autologous graft.