It is currently controversially discussed whether mesenchymal stem cells (MSC) facilitate cartilage regeneration in vivo by a progenitor- or a nonprogenitor-mediated mechanism. Here, we describe a potentially novel unbiased in vivo cell tracking system based on transgenic donor and corresponding immunocompetent marker–tolerant recipient mouse and rat lines in inbred genetic backgrounds. Tolerance of recipients was achieved by transgenic expression of an immunologically neutral but physicochemically distinguishable variant of the marker human placental alkaline phosphatase (ALPP). In this dual transgenic system, donor lines ubiquitously express WT, heat-resistant ALPP protein, whereas recipient lines express a heat-labile ALPP mutant (ALPPE451G) resulting from a single amino acid substitution. Tolerance of recipient lines to ALPP-expressing cells and tissues was verified by skin transplantation. Using this model, we show that intraarticularly injected MSC contribute to regeneration of articular cartilage in full-thickness cartilage defects mainly via a nonprogenitor-mediated mechanism.