The objective of this study was to examine the effects of cyclic compressive loading on chondrogenic differentiation of rabbit bone-marrow mesenchymal stem cells (BM-MSCs) in agarose cultures. Rabbit BM-MSCs were obtained from the tibias and femurs of New Zealand white rabbits. After the chondrogenic potential of BM-MSCs was verified by pellet cultures, cell-agarose constructs were made by suspending BM-MSCs in 2% agarose (107 cells/ml) for a cyclic, unconfined compression test performed in a custom-made bioreactor. Specimens were divided into four groups: control; transforming growth factor (TGF-β) (with TGF-β1 treatment); loading (with stimulation of cyclic, unconfined compressive loading); and TGF-β loading (with TGF-β1 treatment and loading stimulation) groups. In the loading experiment, specimens were subjected to sinusoidal loading with a 10% strain magnitude at a frequency of 1 Hz for 4 hours a day. Experiments were conducted for 3, 7, and 14 consecutive days. While the experimental groups (TGF-β, loading, and TGF-β loading) exhibited significantly higher levels of expressions of chondrogenic markers (collagen II and aggrecan) at three time periods, there were no differences among the experimental groups after an extra 5-day culture. This suggests that compressive loading alone induces chondrogenic differentiation of rabbit BM-MSCs as effectively as TGF-β or TGF-β plus loading treatment. Moreover, both the compressive loading and the TGF-β1 treatment were found to promote the TGF-β1 gene expression of rabbit BM-MSCs. These findings suggest that cyclic compressive loading can promote the chondrogenesis of rabbit BM-MSCs by inducing the synthesis of TGF-β1, which can stimulate the BM-MSCs to differentiate into chondrocytes.