Objective Previous studies have shown that intrinsic behavior of subchondral bone marrow stem cells (BMSCs) is influenced by donors and locations. To understand the variability in cartilage repair outcomes following bone marrow stimulation, we tested the hypothesis that in vivo cartilage repair correlates with in vitro biological properties of BMSCs using a rabbit model. Methods Full-thickness cartilage defects were created in the trochlea and condyle in one knee of skeletally mature New Zealand White rabbits ( n = 8) followed by microdrilling. Three-week repair tissues were analyzed by macroscopic International Cartilage Repair Society (ICRS) scores, O’Driscoll histological scores, and Safranin-O (Saf-O) and type-II collagen (Coll-II) % stain. BMSCs isolated from contralateral knees were assessed for cell yield, surface marker expression, CFU-f, %Saf-O, and %Coll-II in pellet culture followed by correlation analyses with the above cartilage repair responses. Results In vivo cartilage repair scores showed strong, positive correlation with cell number, clonogenic, chondrogenic, and matrix production (Coll-II, GAG) potential of in vitro TGF-βIII stimulated BMSC cultures. Trochlear repair showed clear evidence of donor dependency and strong correlation was observed for interdonor variation in repair and the above in vitro properties of trochlear BMSCs. Correlation analyses indicated that donor- and location-dependent variability observed in cartilage repair can be attributed to variation in the properties of BMSCs in underlying subchondral bone. Conclusion Variation in cell number, clonogenic, chondrogenic, and matrix production potential of BMSCs correlated with repair response observed in vivo and appear to be responsible for interanimal variability as well as location-dependent repair.