Transforming growth factor (TGF)-β-induced chondrogenesis of mesenchymal stem cells derived from bone marrow involves the rapid deposition of a cartilage-specific extracellular matrix. The sequential events in this pathway leading from the undifferentiated stem cell to a mature chondrocyte were investigated by analysis of key matrix elements. Differentiation was rapidly induced in cells cultured in the presence of TGF-β3 or -β2 and was accompanied by the early expression of fibromodulin and cartilage oligomeric matrix protein. An increase in aggrecan and versican core protein synthesis defined an intermediate stage, which also involved the small leucine-rich proteoglycans decorin and biglycan. This was followed by the appearance of type II collagen and chondroadherin. The pathway was also characterized by the appearance of type X collagen, usually associated with hypertrophic cartilage. There was also a change in the pattern of sulfation of chondroitin sulfate, with a progressive increase in the proportion of 6-sulfated species. The major proportion of newly synthesized glycosaminoglycan was part of an aggregating proteoglycan network. These data allow us to define the phenotype of the differentiated cell and to understand in greater detail the sequential process of matrix assembly.