Background/Aims: Joint cartilage defects are difficult to treat due to the limited self-repair capacities of cartilage. Cartilage tissue engineering based on stem cells and gene enhancement is a potential alternative for cartilage repair. Bone morphogenetic protein 2 (BMP2) has been shown to induce chondrogenic differentiation in mesenchymal stem cells (MSCs); however, maintaining the phenotypes of MSCs during cartilage repair since differentiation occurs along the endochondral ossification pathway. In this study, hypoxia inducible factor, or (HIF)-1α, was determined to be a regulator of BMP2-induced chondrogenic differentiation, osteogenic differentiation, and endochondral bone formation. Methods: BMP2 was used to induce chondrogenic and osteogenic differentiation in stem cells and fetal limb development. After HIF-1α was added to the inducing system, any changes in the differentiation markers were assessed. Results: HIF-1α was found to potentiate BMP2-induced Sox9 and the expression of chondrogenesis by downstream markers, and inhibit Runx2 and the expression of osteogenesis by downstream markers in vitro. In subcutaneous stem cell implantation studies, HIF-1α was shown to potentiate BMP2-induced cartilage formation and inhibit endochondral ossification during ectopic bone/cartilage formation. In the fetal limb culture, HIF-1α and BMP2 synergistically promoted the expansion of the proliferating chondrocyte zone and inhibited chondrocyte hypertrophy and endochondral ossification. Conclusion: The results of this study indicated that, when combined with BMP2, HIF-1α induced MSC differentiation could become a new method of maintaining cartilage phenotypes during cartilage tissue engineering.