Cartilage is poorly vascularised with a limited capacity for repair following damage. The poor vascularisation results in cartilage tissue having a low normoxic value. This study examined and compared the effects of physiological cartilage normoxia (2% O2), hypoxia (0.2% O2), and hyperoxia (21% O2) on human articular chondrocytes (hAC) during similar time courses to those prior to transplant in cell therapy procedures. hAC were isolated and maintained at 0.2% O2, 2% O2, or 21% O2. Population doublings (PDs), cell surface area, chondrogenic differentiation potential, RT-PCR, quantitative RT-PCR and immunohistochemistry (Collagen Type II) were used to confirm chondrogenic differentiation of micromass pellets in different O2. Isolation and maintenance of hAC at =2% O2 resulted in significant alterations in surface area (smaller), rate of proliferation (reduced), and chondrogenic differentiation potential (enhanced). Chondrogenic gene expression appeared largely insensitive to O2 concentration. A relationship was apparent between collagen type II protein presence and O2 concentration. Oxygen concentrations of 2% O2 or less promoted retention of a dedifferentiated hAC phenotype and enhanced stability of hAC chondrogenesis.