Our unpublished data has indicated that the perivascular stem cells (PSCs) have increased chondrogenic potential compared to mesenchymal stem cells (MSCs) derived in culture. There has been a recent change in the theory that stem cells work by a paracrine effect rather than differentiation. There are minimal data demonstrating the persistence of implanted stem cells when used for engraftment. This study aimed to develop an autologous large animal model for perivascular stem cells as well as to determine if cells were retained in the articular cartilage defects. The reactivity of anti-human and anti-ovine antibodies was ascertained using immunohistochemistry and fluorescence-activated cell sorting (FACS). A panel of antibodies were combined and used to identify and purify pericytes (CD34-CD45-CD146+) and adventitial cells (CD34+CD45-CD146-) using FACS. The purified cells were cultured and their identity checked using FACS. These cultured cells demonstrated osteogenic, adipogenic and chondrogenic potential. Autologous ovine PSCs (oPSCs) were isolated, cultured and transfected using a GFP virus. The transfection rate was 88%. The cells were implanted into an articular cartilage defect on the medial femoral condyle using a hydrogel, four weeks following implantation the condyle was explanted and confocal laser scanning microscopy demonstrated the presence of oPSCs in the defect. Histology did not demonstrate any repair tissue at this early time point. These data have confirmed the viability our large animal model and that the implanted stem cells were retained in the defect four weeks following implantation