Cartilage is a realistic target for tissue engineering given the avascular nature and cellular composition of the tissue. Much of the work in this field has been largely empirical, indicating the need for alternative approaches to the design of cartilage formation protocols. Given the heterogeneity associated with human mesenchymal populations, continuous cell lines may offer an alternative to model and simplify cartilage generation protocols. We therefore exploited the potential of the murine chondrocytic ATDC5 cell line to, i) delineate the process of chondrocyte differentiation in monolayer culture and three-dimensional micromass pellet culture systems, and ii) model cartilage formation utilising appropriate scaffold and bioreactor (perfused and rotating) technologies. Monolayer cultures of ATDC5 cells over a 28-day period in presence of insulin demonstrated various stages of chondrocyte differentiation- proliferative, pre-hypertrophic, hypertrophic and finally, mineralisation of cartilaginous nodules. This was confirmed by gene and protein expression, by qPCR and Western blotting respectively, of chondrogenic differentiation markers- Sox-9, Bcl-2, Type II and X collagens. Pellet cultures of ATDC5 cells under chondrogenic conditions (10 ng/ml TGF-beta3, 1X ITS {insulin, transferrin, selenium}, 10 nanomolar dexamethasone, 100 micromolar ascorbate-2-phosphate) illustrated a gradual progression from an aggregation of cells at day 7, to initiation of matrix synthesis at day 14, followed by formation of well-defined cartilaginous structures at day 21. Chondrogenic differentiation at day 21 was evident by numerous proliferative/ pre-hypertrophic chondrocytes, staining for Sox-9, Aggrecan, Type II collagen and PCNA, lodged in distinct lacunae embedded in cartilaginous matrix of proteogly-cans and Type II collagen. Inclusion of TGF-beta3 in the chondrogenic medium during pellet culture beyond 21 days maintained the pre-hypertrophic phenotype, even at day 28. In contrast, removal of TGF-beta3, addition of 50 nanomolar thyroxine and reduction of dexa-methasone to 1 nanomolar in the chondrogenic medium stimulated hypertrophy at day 28, evident by down-regulation of Sox-9 expression. ATDC5 cells cultured on Polyglycolic acid fleece in the rotating bioreactor or encapsulated in chitosan /alginate and cultured in the perfused bioreactor for 21 days, formed cartilaginous explants reminiscent of hyaline cartilage. Thus, ATDC5 cells constitute an ideal cell line to elucidate the steps of chondrocyte differentiation and cartilage formation.