Background: The use of chondrocytes for cartilage tissue engineering is hampered by the limited number of chondrocytes that can be harvested and potential dedifferentiation during cell expansion. While stem cells is a promising approach to create a large population of differentiated cells, multiple growth factors are typically required for differentiation. Alternatively, co-culturing of stem cells with mature chondrocytes can induce differentiation. However, it is not clear which stem cell population and co-culturing method best supports chondrogenesis. While co-culture of stem cells with chondrocytes has been extensively shown to improve chondrogenesis in general, results from previous reports were convoluted by the use of 2D culture or scaffold materials, resulting in discrepancies with the comparison between direct and indirect cocultures. Methods: The purpose of this study was to investigate the extent of chondrogenic differentiation of direct and indirect co-culture of bone marrow stem cells (BMSCs) or adipose-derived stem cells (ASCs) with mature chondrocytes in 3D scaffold-free culture. For direct co-culture, cell pellets were created by centrifugation, consisting of chondrocytes alone or different proportions of stem cells to chondrocytes. For indirect co-culture, cell pellets of chondrocytes or stem cells were created individually and cultured with a separation by a trans-well membrane. Chondrogenic differentiation potential was assessed by quantification of DNA, GAG and collagen contents, as well as collagen I, collagen II and Safranin-O staining. Statistical significance was analyzed using one-way ANOVA with Tukey's post-hoc tests. Results: Direct co-culture of chondrocytes with BMSCs resulted in superior chondrogenesis compared to all other co-culture methods. Cultures with the ratio of 3:1 BMSCs to chondrocytes stained positive for chondrogenic markers and displayed a uniform deposition of cartilaginous extracellular matrix. In addition, the extent of matrix deposition in direct BMSC co-cultures were comparable to growth factor differentiated BMSCs. Conclusions: Thus, BMSCs appear to be superior to ASCs in their differentiation capacity during coculture and a direct co-culture with chondrocytes (3:1 ratio) may be a feasible strategy for cartilage tissue engineering.