Objective. Muscle-derived stem cells (MDSCs) isolated from mouse skeletal muscle exhibit long-time proliferation, high self-renewal, and multipotent differentiation. This study was undertaken to investigate the ability of MDSCs that were retrovirally transduced to express bone morphogenetic protein 4 (BMP-4) to differentiate into chondrocytes in vitro and in vivo and enhance articular cartilage repair.Methods. Using monolayer and micromass pellet culture systems, we evaluated the in vitro chondrogenic differentiation of LacZ-and BMP-4-transduced MDSCs with or without transforming growth factor 1 (TGF1) stimulation. We used a nude rat model of a fullthickness articular cartilage defect to assess the duration of LacZ transgene expression and evaluate the ability of transplanted cells to acquire a chondrocytic phenotype. We evaluated cartilage repair macroscopically and histologically 4, 8, 12, and 24 weeks after surgery, and performed histologic grading of the repaired tissues.Results