Mesenchymal stem cells (MSCs) display substantial cell-to-cell heterogeneity, complicating their use in regenerative medicine. However, conventional bulk assays mask this variability. Here we show that both chondrocytes and chondrogenically induced MSCs exhibit substantial mRNA expression heterogeneity. Single-molecule RNA FISH to measure mRNA expression of differentiation markers in single cells reveals that sister cell pairs have high levels of mRNA variability, suggesting that marker expression is not heritable. Surprisingly, this variability does not correlate with cell-to-cell differences in cartilage-like matrix production. Transcriptome-wide analysis suggests that no combination of markers can predict functional potential. De-differentiating chondrocytes also show a disconnect between mRNA expression of the cartilage marker aggrecan and cartilage-like matrix accumulation. Altogether, these quantitative analyses suggest that sorting subpopulations based on these markers would only marginally enrich the progenitor population for 'superior' MSCs. Our results suggest that instantaneous mRNA abundance of canonical markers is tenuously linked to the chondrogenic phenotype at the single-cell level.