Articular cartilage has a limited ability to repair itself after damage due to injury or disease. Regenerative therapies using chondrocytes, the primary cartilage cell population, result in poor quality repair tissue and often cause further damage at the donor site. Furthermore, there are no current therapies which aim to regenerate the zonal organization and function of the tissue. In an effort to address both cell source limitations and zonal tissue regeneration the goal of the presented work was to utilize a mesenchymal stem cell (MSC) population to generate abundant numbers of chondrocytes with zonal phenotypes. To this end, zonal subpopulations of articular chondrocytes were isolated, characterized for differences in gene and protein expression, and exposed to scaffold environments designed to aid in phenotype retention. From these results, and reports in the literature, it was clear a major functional difference between zones was the production of a lubricating protein, proteoglycan 4 (PRG4), in the superficial zone only. Middle and deep zone cells were found to be phenotypically similar and distinct from superficial zone cells. It was further found that gene expression of PRG4 by superficial zone cells in alginate culture can be significantly enhanced by incorporation of matrix molecules hyaluronic acid (HA) and chondroitin sulfate (CS) to the scaffold environment. HA and CS also had favorable effects on MSC chondrogenesis by upregulating chondrogenic transcription factor Sox9 gene expression, and downregulating type I collagen (fibroblastic marker) gene expression. The potential of soluble signals derived from zonal (superficial or middle/deep) cartilage explants to drive MSC chondrogenesis was also investigated. Results show that signals derived from cartilage explants can induce chondrogenesis to varying degrees, with superficial zone explants inducing robust and sustained differentiation. This differentiation was found to be dependent on the proximity of the MSCs and tissue explants, implying that communication between MSCs and chondrocytes is necessary for chondrogenic induction. Coculture with superficial zone explants also upregulated MSC gene expression of PRG4. This research highlights the important functional differences between zonal chondrocyte populations and identifies MSCs as a progenitor population capable of differentiating into zone-specific chondrocytes.