Cell-based therapies development for the treatment of osteoarthritis (OA) requires an understanding of the disease progression and attributes of the cells resident in cartilage. This study focused on quantitative assessment of the concentration and biological potential of stem and progenitor cells resident in different zones of cartilage displaying macroscopic Outerbridge grade 1-2 OA, and their correlation with OA progression based on established histologic scoring system. Lateral femoral condyles were collected from 15 patients with idiopathic OA and varus knees undergoing total knee arthroplasty. Superficial(C , top ∼ 500 µm) and deep cartilage(C ) was separated. Chondrogenic Connective Tissue Progenitors (CTP-C) were assayed by standardized Colony-Forming-Unit assay using automated image analysis (Colonyze ) based on ASTM standard F-2944-12. Cell concentration (cells/mg) was significantly greater in C (median: 7,000; range: 3,440-17,600) than C (median: 5,340; range: 3,393-9,660), p = 0.039. Prevalence (CTPs/million cells) was not different between C (median: 1,274; range: 0-3,898) and C (median:1,365; range:0-6,330), p = 0.42. In vitro performance of CTP-C progeny varied widely within and between patients, manifest by variation in colony size and morphology. Mean histopathological Mankin score was 4.7 (SD = 1.2), representing mild to moderate OA. Tidemark breach by blood vessels was associated with lower C cell concentration (p = 0.02). Matrix degradation was associated with lower C cell and CTP-C concentration (p = 0.015 and p = 0.095, respectively), independent of articular surface changes. These findings suggest that the initiation of OA may occur in either superficial or deep zones. The pathological changes affect CTP-Cs in C and C cartilage zones differently. The heterogeneity among the available CTP-Cs in C and C suggests performance-based selection to optimize cell-sourcing strategies for therapy. © 2017 Orthopaedic Research Society. Published by Wiley Periodicals, Inc. J Orthop Res 36:1728-1738, 2018.