This study investigated the effects of TGFbeta1, BMP2 or a combination of both on the chondrogenic differentiation of mesenchymal stem cells (MSCs) in a serum-free micromass culture system in vitro. Putative MSCs harvested from the iliac crest of 4-5 month old New Zealand White Rabbits were expanded and cultured in three-dimensional high density micromass aggregate cultures containing TGFbeta1, BMP2 or a combination of both, in the absence of serum. After 14-20 days of culture, chondrogenic differentiation of the MSCs was assayed by toluidine blue staining, immunohistochemistry and semi-quantitative RT-RCR of type I collagen (CI) and type II collagen (CII). Quantitative measurements of cell proliferation and sulfated glycosaminoglycan (s-GAG) were also carried out to assess the growth rate and matrix deposition of the cultured aggregates. Both immunohistochemical staining and semi-quantitative RT-PCR showed that the combination of BMP2 and TGFbeta1 resulted in a marked enhancement of collagen II synthesis, with minimal collagen I expression, which would suggest hyaline-like cartilage formation. Additionally, BMP2 and TGFbeta1 had a synergistic effect on matrix proteoglycan deposition, as assessed by metachromatic toluidine blue staining. This is consistent with the quantitative measurement of glycosaminoglycans, whereby a significant increase in GAG/DNA was noted in the co-treatment group. Hence, it can be concluded that the combination of BMP2 and TGFbeta1 has a synergistic effect on the differentiation of MSC into hyaline-like cartilage tissue.