Articular cartilage disorders and injuries often result in life long chronic pain and compromised quality of life, thus regeneration of articular cartilage is a persistent challenge to medical science. One of the most promising therapeutic approaches is cell based tissue engineering which provides a healthy population of cells to the injured site and requires differentiated chondrocytes from the uninjured site as base material. Use of healthy chondrocytes has several limitations and an excellent alternative cell population could be adult marrow stromal cells/mesenchymal stem cells (MSCs) which are known to possess extensive proliferation potential and proven capability to differentiate into chondrocytes. Both, in vivo and in vitro pliability of MSCs and chondrocytes greatly depends on their microenvironment. Gene and protein expression profiles of both the cell types can be altered by soluble factors from surrounding tissue/ cells or by direct cellular contact. For MSC or chondrocyte-based cartilage repair, inhibition of hypertrophy and stabilization of the cartilaginous phenotype in the implant is a prerequisite for success and long lasting vitality of the repaired tissue.