Exposure of progenitor cells with chondrogenic potential to recombinant human osteogenic protein-1 [rhOP-1, or bone morphogenetic protein-7 (BMP-7] may be of therapeutic interest in the regeneration of articular cartilage. Therefore, in this study, we examined the influence of rhOP-1 on cartilage formation by human perichondrium tissue containing progenitor cells with chondrogenic potential in vitro. Fragments of outer ear perichondrium tissue were embedded in clotting autologous blood to which rhOP-1 had been added or not (controls), and the resulting explant was cultured for 3 weeks without further addition of rhOP-1. Cartilage formation was monitored biochemically by measuring [³5;S]sulfate incorporation into proteoglycans and histologically by monitoring the presence of metachromatic matrix with cells in nests. The presence of rhOP-1 in the explant at the beginning of culture stimulated [³5;S]sulfate incorporation into proteoglycans in a dose-dependent manner after 3 weeks of culture. Maximal stimulation was reached at 40 microgram/ml. Histology revealed that explants treated with 20-200 microgram/ml rhOP-1, but not untreated control explants, contained areas of metachromatic-staining matrix with chondrocytes in cell nests. These results suggest that rhOP-1 stimulates differentiation of cartilage from perichondrium tissue. The direct actions of rhOP-1 on perichondrium cells to stimulate chondrocytic differentiation and production of cartilage matrix in vitro provide a cellular mechanism for the induction of cartilage formation by rhOP-1 in vivo. Thus, rhOP-1 may promote early steps in the cascade of events leading to cartilage formation. Therefore, rhOP-1 could be an interesting factor for regeneration of cartilage in articular cartilage defects.