In articular cartilage repair, cells that will be responsible for the formation of repair tissue are often exposed to an osteochondral environment. To study cartilage repair mechanisms in vitro, we have recently developed a bovine osteochondral biopsy culture model in which cartilage defects can be simulated reproducibly. Using this model, we now aimed at studying the chondrogenic potential of human bone marrow-derived mesenchymal stem cells (hBMSCs) in an osteochondral environment. In contrast to standard in vitro chondrogenesis, it was found that supplementing transforming growth factor beta (TGF beta) to culture medium was not required to induce chondrogenesis of hBMSCs in an osteochondral environment. hBMSC culture in defects created in osteochondral biopsies or in bone-only biopsies resulted in comparable levels of cartilage-related gene expression, whereas culture in cartilage-only biopsies did not induce chondrogenesis. Subcutaneous implantation in nude mice of osteochondral biopsies containing hBMSCs in osteochondral defects resulted in the formation of more cartilaginous tissue than hBMSCs in chondral defects. The subchondral bone secreted TGF beta; however, the observed results could not be attributed to TGF beta, as either capturing TGF beta with an antibody or blocking the canonical TGF beta signaling pathway did not result in significant changes in cartilage-related gene expression of hBMSCs in the osteochondral culture model. Inhibition of BMP signaling did not prevent chondrogenesis. In conclusion, we demonstrate that chondrogenesis of hBMSCs is induced by factors secreted from the bone. We have strong indications that this is not solely mediated by members of the TGF beta family but other, yet unknown, factors originating from the subchondral bone appeared to play a key role.