Human embryonic stem cells (hESCs) are considered as useful tools for pre-clinical studies in regenerative medicine. Although previous reports have shown direct chondrogenic differentiation of mouse and hESCs, low yield and cellular heterogenicity of the resulting cell population impairs the generation of sufficient numbers of differentiated cells for further testing and applications. Based on our previously established high-density micromass model system to study hESC chondrogenesis, we evaluated the effects of transforming growth factor (TGF)-β1 and bone morphogenetic protein-2 on early stages of chondrogenic differentiation and commitment by hESCs. Significant chondrogenic induction of hESCs, as determined by quantitative measurements of cartilage-related gene expression and matrix protein synthesis, was achieved in the presence of TGF-β1. By means of selective growth factor combination (TGF-β1, FGF-2 and platelet-derived growth factor-bb) and plating on extracellular matrix substratum, we report here the reproducible isolation of a highly expandable, homogenous and unipotent chondrogenic cell population, TC1, from chondrogenically committed hESCs. Like primary chondrocytes, TC1 rapidly dedifferentiates upon isolation and monolayer expansion but retains the chondrogenic differentiation potential and responds to TGF-β1 for cartilaginous tissue formation both in vitro and in vivo. In addition, TC1 displays a somatic cell cycle kinetics, a normal karyotype and does not produce teratoma in vivo. Thus, TC1 may provide a potential source of chondrogenic cells for drug testing, gene therapy and cell-based therapy.