The utilization of adult stem cells in tissue engineering is a promising solution to the problem of tissue or organ shortage. Adult bone marrow derived mesenchymal stem cells (MSCs) are undifferentiated, multipotential cells which are capable of giving rise to chondrocytes when maintained in a three-dimensional culture and treated with members of the transforming growth factor-β (TGF-β) family of growth factors. In this study, we fabricated a nanofibrous scaffold (NFS) made of a synthetic biodegradable polymer, poly(ε-caprolactone) (PCL), and examined its ability to support in vitro chondrogenesis of MSCs. The electrospun PCL porous scaffold was constructed of uniform, randomly oriented nanofibers with a diameter of 700 nm, and structural integrity of this scaffold was maintained over a 21-day culture period. MSCs cultured in NFSs in the presence of TGF-β1 differentiated to a chondrocytic phenotype, as evidenced by chondrocyte-specific gene expression and synthesis of cartilage-associated extracellular matrix (ECM) proteins. The level of chondrogenesis observed in MSCs seeded within NFSs was comparable to that observed for MSCs maintained as cell aggregates or pellets, a widely used culture protocol for studying chondrogenesis of MSCs in vitro. Due to the physical nature and improved mechanical properties of NFSs, particularly in comparison to cell pellets, the findings reported here suggest that the PCL NFS is a practical carrier for MSC transplantation, and represents a candidate scaffold for cell-based tissue engineering approaches to cartilage repair.