Articular cartilage serves as a low-friction, load-bearing tissue without the support with blood vessels, lymphatics and nerves, making its repair a big challenge. Transforming growth factor-beta 3 (TGF-β3), a vital member of the highly conserved TGF-β superfamily, plays a versatile role in cartilage physiology and pathology. TGF-β3 influences the whole life cycle of chondrocytes and mediates a series of cellular responses, including cell survival, proliferation, migration, and differentiation. Since TGF-β3 is involved in maintaining the balance between chondrogenic differentiation and chondrocyte hypertrophy, its regulatory role is especially important to cartilage development. Increased TGF-β3 plays a dual role: in healthy tissues, it can facilitate chondrocyte viability, but in osteoarthritic chondrocytes, it can accelerate the progression of disease. Recently, TGF-β3 has been recognized as a potential therapeutic target for osteoarthritis (OA) owing to its protective effect, which it confers by enhancing the recruitment of autologous mesenchymal stem cells (MSCs) to damaged cartilage. However, the biological mechanism of TGF-β3 action in cartilage development and OA is not well understood. In this review, we systematically summarize recent progress in the research on TGF-β3 in cartilage physiology and pathology, providing up-to-date strategies for cartilage repair and preventive treatment.