Regenerative medicine-based approaches for the repair of damaged cartilage rely on the ability to propagate cells while promoting their chondrogenic potential. Thus, conditions for cell expansion should be optimized through careful environmental control. Appropriate oxygen tension and cell expansion substrates and controllable bioreactor systems are probably critical for expansion and subsequent tissue formation during chondrogenic differentiation. We therefore evaluated the effects of oxygen and microcarrier culture on the expansion and subsequent differentiation of human osteoarthritic chondrocytes. Freshly isolated chondrocytes were expanded on tissue culture plastic or CultiSpher-G microcarriers under hypoxic or normoxic conditions (5% or 20% oxygen partial pressure, respectively) followed by cell phenotype analysis with flow cytometry. Cells were redifferentiated in micromass pellet cultures over 4 weeks, under either hypoxia or normoxia. Chondrocytes cultured on tissue culture plastic proliferated faster, expressed higher levels of cell surface markers CD44 and CD105 and demonstrated stronger staining for proteoglycans and collagen type II in pellet cultures compared with microcarrier-cultivated cells. Pellet wet weight, glycosaminoglycan content and expression of chondrogenic genes were significantly increased in cells differentiated under hypoxia. Hypoxia-inducible factor-3α mRNA was up-regulated in these cultures in response to low oxygen tension. These data confirm the beneficial influence of reduced oxygen on ex vivo chondrogenesis. However, hypoxia during cell expansion and microcarrier bioreactor culture does not enhance intrinsic chondrogenic potential. Further improvements in cell culture conditions are therefore required before chondrocytes from osteoarthritic and aged patients can become a useful cell source for cartilage regeneration.