Regenerative medicine strategies have increasingly focused on skeletal stem cells (SSCs), in response to concerns such as donor site morbidity, dedifferentiation and limited lifespan associated with the use of articular chondrocytes for cartilage repair. The suitability of SSCs for cartilage regeneration, however, remains to be fully determined. This study has examined the chondrogenic potential of human STRO-1-immunoselected SSCs (STRO-1(+) SSCs), in comparison to human articular chondrocytes (HACs), by utilising two bioengineering strategies, namely "scaffold-free" three-dimensional (3-D) pellet culture and culture using commercially available, highly porous, 3-D scaffolds with interconnected pore networks. STRO-1(+) SSCs were isolated by magnetic-activated cell sorting from bone marrow samples of haematologically normal osteoarthritic individuals following routine hip replacement procedures. Chondrocytes were isolated by sequential enzymatic digestion of deep zone articular cartilage pieces dissected from femoral heads of the same individuals. After expansion in monolayer cultures, the harvested cell populations were centrifuged to form high-density 3-D pellets and also seeded in the 3-D scaffold membranes, followed by culture in serum-free chondrogenic media under static conditions for 21 and 28 days, respectively. Chondrogenic differentiation was determined by gene expression, histological and immunohistochemical analyses. Robust cartilage formation and expression of hyaline cartilage-specific markers were observed in both day-21 pellets and day-28 explants generated using HACs. In comparison, STRO-1(+) SSCs demonstrated significantly lower chondrogenic differentiation potential and a tendency for hypertrophic differentiation in day-21 pellets. Culture of STRO-1(+) SSCs in the 3-D scaffolds improved the expression of hyaline cartilage-specific markers in day-28 explants, however, was unable to prevent hypertrophic differentiation of the SSC population. The advantages of application of SSCs in tissue engineering are widely recognised; the results of this study, however, highlight the need for further development of cell culture protocols that may otherwise limit the application of this stem cell population in cartilage bioengineering strategies.