Osteoarthritis in the knees, which can be caused by meniscal defect, constitutes an increasingly common medical problem. Repair for massive meniscal defect remains a challenge owing to a lack of cell kinetics for the menisci precursors in knee joint. The synovium plays pivotal roles during the natural course of meniscal healing and contains mesenchymal stem cells (MSCs) with high chondrogenic potential. Here, we investigated whether intra-articular injected synovium-MSCs enhanced meniscal regeneration in rat massive meniscal defect. To track the injected cells, we developed transgenic rats expressing dual luciferase (Luc) and LacZ. The cells derived from synovium of the rats demonstrated colony-forming ability and multipotentiality, both characteristics of MSCs. Hierarchical clustering analysis revealed that gene expression of meniscal cells was closer to that of synovium-MSCs than to that of bone marrow-MSCs. Two to 8 weeks after five million Luc/LacZ+ synovium-MSCs were injected into massive meniscectomized knee of wild-type rat, macroscopically, the menisci regenerated much better than it did in the control group. After 12 weeks, the regenerated menisci were LacZ positive, produced type 2 collagen, and showed meniscal features by transmission electron microscopy. In in-vivo luminescence analysis, photons increased in the meniscus-resected knee over a 3-day period, then decreased without detection in all other organs. LacZ gene derived from MSCs could not be detected in other organs except in synovium by real-time PCR. Synovium-MSCs injected into the massive meniscectomized knee adhered to the lesion, differentiated into meniscal cells directly, and promoted meniscal regeneration without mobilization to distant organs.