The ability to isolate, expand and differentiate adult stem cells into a chondrogenic lineage is an important step in the development of tissue engineering approaches for cartilage repair or regeneration for the treatment of joint injury or osteoarthritis, as well as for their application in plastic or reconstructive surgery. Adipose-derived stem cells (ASCs) provide an abundant and easily accessible source of adult stem cells for use in such regenerative approaches. This protocol first describes the isolation of ASCs from liposuction aspirate. The cell culture conditions provided for ASC expansion provide a large number of multipotent stem cells. Instructions for growth factor-based induction of ASCs into chondrocyte-like cells using either cell pellet or alginate bead systems are detailed. These methods are similar to those published for chondrogenesis of bone marrow-derived mesenchymal stem cells but distinct because of the unique nature of ASCs. Investigators can expect consistent differentiation of ASCs, allowing for slight variation as a result of donor and serum lot effects. Approximately 10-12 weeks are needed for the entire process of ASC isolation, including the characterization of chondrocyte-like cells, which is also described.