Unique progenitor cells have been identified recently and successfully cultured in vitro from human articular cartilage. These cells are able to maintain chondrogenic potential upon extensive expansion. In this study, we have developed a sheep, ex-vivo model of cartilage damage and repair, using these progenitor cells. This study addresses the question can such a model be used to determine factors required for progenitor cell proliferation, differentiation and integration of matrix onto bone. The hypothesis was that sheep allogenic cartilage derived progenitor cells could regenerate artificially damaged sheep articular cartilage in an osteochondral culture model. Progenitor cells were derived from ovine articular cartilage using a differential adhesion assay to fibronectin and expanded clonally. These clonal cells were marked with lentiviral vectors derived from the Human Immunodeficiency Virus-1. When a self-inactivating lentiviral vector encoding a ubiquitous phosphoglycerate kinase promoter, driving a Green Fluorescent Protein (GFP) reporter gene, was used to transduce these cells, up to 80% of these progenitor cells expressed GFP. Normal sheep medial femoral condyles containing about 2mm thick sub-condral bone were obtained and 4mm circular defects created on the cartilage surface using a biopsy punch. Condyles were cultured for two weeks in vitro with GFP labelled progenitor cells within a fibrin glue scaffold (Tisseel Lyo) and matrix production (collagen) as determined by spatially offset Raman spectroscopy and immunohistochemistry was demonstrated. Progenitor cells were able to proliferate and differentiate into collagen producing cells. Such an ex-vivo model system is an effective tool for the analysis of cartilage repair from various sources of stem cells. These ex-vivo experiments and variations on defect type, size, titration of scaffold and progenitor cell numbers requirements can further be used as a basis for screening prior to in vivo experiments.