Human embryonic germ (hEG) cells have the potential to self-renew over long periods of time and differentiate into various lineages. Cells derived from embryoid bodies of hEG cells express a broad spectrum of gene markers and have been induced towards cells of ecto-dermal and recently endo-dermal and mesenchymal lineages. LVEC cells express a number of surface marker proteins characteristic of mesenchymal stem cells (MSCs), indicating the potential of these cells to differentiate into mesenchymal tissues. Here we demonstrate the homogenous differentiation of LVEC cells into hyaline cartilage. Three dimensional tissue formation is achieved by encapsulating cells in synthetic hydrogels followed by incubation in chondrocyte-conditioned culture medium. Homogenous hyaline cartilage was produced, even after 63 population doublings (13 passages). The high proliferative capacity of these cells without teratoma formation, homogenous differentiation, and three-dimensional cartilage tissue formation suggests the significant potential of LVEC cells for cartilage tissue engineering applications.