In the present work, neonatal human dermal fibroblasts (nHDFs) were evaluated as a potential cell source for intervertebral disc repair. Chondrogenic differentiation of nHDFs was studied in the presence or absence of hydrostatic compression under normal and hypoxic conditions. In addition, the potentially synergistic effects of mechanical stimulation and bone morphogenetic protein (BMP)-2 on the chondrogenic differentiation of nHDFs were assessed. Mechanical stimulation was applied to the cells encapsulated in alginate beads using a custom-built bioreactor system for either a 1- or 3-week period at a frequency of 1 Hz for 4 h/day. In general, after 21 days of culture, high cell viability was observed for all the groups, with the exception of the groups exposed to intermittent mechanical stimulation for 3 weeks. Long-term intermittent application of mechanical stimulation under low O(2) conditions resulted in elevated collagen biosynthesis rate from day 0. Inclusion of BMP-2 for this group improved the chondrogenic differentiation of nHDFs, as indicated by elevated aggrecan gene expression and an increased collagen production rate compared to the day 0 group. Thus, the combination of hypoxia, BMP-2 supplementation, and long-term intermittent application of dynamic hydrostatic pressure was found to be a potent promoter of the chondrogenic differentiation of nHDFs.