Mesenchymal progenitor cells provide a source of cells for the repair of musculoskeletal tissue. However, in vitro models are needed to study the mechanisms of differentiation of progenitor cells. This study demonstrated the successful induction of in vitro chondrogenesis with human bone-marrow-derived osteochondral progenitor cells in a reliable and reproducible culture system. Human bone marrow was removed and fractionated, and adherent cell cultures were established. The cells were then passaged into an aggregate culture system in a serum-free medium. Initially, the cell aggregates contained type-I collagen and neither type-II nor type-X collagen was detected. Type-II collagen was typically detected in the matrix by the fifth day, with the immunoreactivity localized in the region of metachromatic staining. By the fourteenth day, type-II and type-X collagen were detected throughout the cell aggregates, except for an outer region of flattened, perichondrial-like cells in a matrix rich in type-I collagen. Aggrecan and link protein were detected in extracts of the cell aggregates, providing evidence that large aggregating proteoglycans of the type found in cartilaginous tissues had been synthesized by the newly differentiating chondrocytic cells; the small proteoglycans, biglycan and decorin, were also detected in extracts. Immunohistochemical staining with antibodies specific for chondroitin 4-sulfate and keratan sulfate demonstrated a uniform distribution of proteoglycans throughout the extracellular matrix of the cell aggregates. When the bone-marrow-derived cell preparations were passaged in monolayer culture as many as twenty times, with cells allowed to grow to confluence at each passage, the chondrogenic potential of the cells was maintained after each passage.