Identification of progenitor/stem cell populations that differentiate specifically towards superficial zone articular chondrocytes is an unmet challenge for cartilage tissue engineering. Using fluorescence activated cell sorting (FACS) analysis we found a characteristic pattern of "side population" (SP) stem cells identified by the Hoechst 33342 dye. We established micromass cultures from this population of cells and tested their chondrogeneic potential. Control (untreated) cultures were minimally stained for Alcian blue - a marker of chondrogenesis. However, with BMP-7 treatment, Alcian blue staining was increased. Superficial zone protein - a specific marker for articular cartilage superficial zone chondrocytes - increased with BMP-7 and/or TGF-beta1 treatment in SP micromass cultures. Our results demonstrate the presence of stem/progenitor cells in the SP fraction isolated from the surface zone of bovine cartilage and have the ability to specifically differentiate towards the superficial zone articular chondrocyte.