Articular cartilage exhibits little intrinsic repair capacity, and new tissue engineering approaches are being developed to promote cartilage regeneration using cellular therapies. The goal of this study was to examine the chondrogenic potential of adipose tissue-derived stromal cells. Stromal cells were isolated from human subcutaneous adipose tissue obtained by liposuction and were expanded and grown in vitro with or without chondrogenic media in alginate culture. Adipose-derived stromal cells abundantly synthesized cartilage matrix molecules including collagen type II, VI, and chondroitin 4-sulfate. Alginate cell constructs grown in chondrogenic media for 2 weeks in vitro were then implanted subcutaneously in nude mice for 4 and 12 weeks. Immunohistochemical analysis of these samples showed significant production of cartilage matrix molecules. These findings document the ability of adipose tissue-derived stromal cells to produce characteristic cartilage matrix molecules in both in vitro and in vivo models, and suggest the potential of these cells in cartilage tissue engineering.