Despite the knowledge that superficial zone chondrocytes (SZC, located within 100 μm of the articular surface) and deep zone chondrocytes (DZC, located near the calcified zone) have distinct phenotypes, previous studies on bone morphogenetic proteins (BMPs) have not differentiated its effects on SZC versus DZC. Using a pellet culture model we have compared phenotype, morphology and matrix accumulation in SZC and DZC with or without adenovirus-mediated overexpression of BMP-2 or -7 or the BMP antagonist Noggin. Greater accumulation of proteoglycan (PG)-rich matrix in the untreated DZC was associated with a hypertrophic phenotype with large cell diameters and high gene expression levels of runt-related transcription factor-2 (Runx2) as well as higher endogenous BMP activity. Noggin overexpression decreased matrix accumulation and cell diameters in SZC and DZC, confirming a role for endogenous BMP in both processes. In DZC, overexpression of either BMP2 or -7 increased cell diameter without increasing PG-rich matrix accumulation. In contrast, in SZC, BMP overexpression increased matrix accumulation and type II collagen gene expression without increasing cell diameter. These data indicate that differences in endogenous BMP activity level and responsiveness to BMPs define, in part, the differences between the SZC and DZC phenotype. They also suggest that SZC may be a more appropriate target for BMP therapy than DZC.