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This study addresses synergistic effects of bone morphogenetic protein-2 (BMP-2) and transforming growth factor-β3 (TGF-β3) in the induction of chondrocytic differentiation of bone marrow multipotent mesenchymal stromal cells (BM MSCs) in vitro for potential use in intervertebral disc (IVD) repair. Human BM MSCs encapsulated in alginate beads were induced to differentiate in serum-free medium containing BMP-2 and TGF-β3. The expression of chondrocytic genes and proteins was analyzed by real-time PCR, western blot, histological, and immunohistochemical assays. This differentiation system showed a potent induction of chondrocytic phenotypes. The expression of chondrocytic markers, such as aggrecan (ACAN) and type II collagen (COL2A1), was upregulated at higher levels than using TGF-β3 alone. Blocking BMP-2 by noggin completely suppressed BMP-2–enhanced gene and protein expression, confirming a crucial input of BMP-2 signaling in this differentiation process. Inhibition of extracellular signal-regulated kinases 1 and 2signaling resulted in an increase in ACAN and COL2A1 gene expression, suggesting a negative regulatory role of this pathway. In conclusion, BMP-2 enhances TGF-β3–mediated chondrogenesis of MSCs. The combination of BMP-2 and TGF-β3 in alginate culture is superior to the standard differentiation method using TGF-β alone. This potent induction system may provide an alternative cell source for IVD and cartilage regeneration in clinical practice.