In this study a three step culture system, 2D-3D sequential culture in vitro and further implantation in vivo was developed to induce human embryonic stem cells (hESCs) into cartilage like tissues. Five-day-old embryoid bodies were plated for chondrogenic induction for 27 days (step1), then the cells were suspended in alginate and seeded onto polylactic-co-glycolic acid (PLGA) scaffolds for 3D cultivation for 7 days (step 2) and the cells/alginate/PLGA complexes were further transplanted into nude mice for 8 weeks (step 3). At same time, some of complexes were cultured in vitro up to 8 weeks. At the end of step 1, cells exhibited fibroblast-like morphology and expressed chondrocyte-specific markers, Sox 9 and collagen II. During the following 8 weeks of 3D cultivation in vitro, cells displayed spherical morphology, decreased immunoreactivity to Sox-9 and increased one to collagen II, demonstrated further differentiation to mature chondrocyte. In implanted grafts, not only cells appeared typical chondrocytes shape and markers but also cartilage like tissues were formed. These results indicate that 2D-3D sequential culture in vitro is an efficient protocol to induce hESCs differentiates into chondrocytes, while the three step culture system may be an appropriate procedure to derive cartilage like tissues from hESCs.