Summary Objective The long-term performance of cell-seeded matrix-based cartilage constructs depends on (1) the development of sufficient biomechanical properties, and (2) lateral integration with host tissues, both of which require cartilage-specific matrix deposition within the scaffold. In this study, we have examined the potential of tissue-engineered cartilage analogs developed using different cell types, i.e., mesenchymal stem cells (MSCs) vs chondrocytes and de-differentiated chondrocytes, in an established “construct in cartilage ring” model. Design Cell-laden constructs of differentiated chondrocytes, de-differentiated chondrocytes after two, five or eight population doublings, and MSCs were either implanted into a native cartilage ring immediately after fabrication (immature group) or pre-treated for 21 days in a transforming growth factor-β3 (TGF-β3) containing medium prior to implantation. After additional culture for 28 days in a serum-free, chemically defined medium, the extent of lateral integration, and biochemical and biomechanical characteristics of the implants as hybrid constructs were assessed. Results The quality of integration, the amount of accumulated cartilage-specific matrix components and associated biomechanical properties were found to be highest when using differentiated chondrocytes. De-differentiation of chondrocytes negatively impacted the properties of the implants, as even two population doublings of the chondrocytes in culture significantly lowered cartilage repair capacity. In contrast, MSCs showed chondrogenic differentiation with TGF-β3 pre-treatment and superior integrational behavior. Conclusions Chondrocyte expansion and de-differentiation impaired the cell response, resulting in inferior cartilage repair in vitro. With TGF-β3 pre-treatment, MSCs were able to undergo sustained chondrogenic differentiation and exhibited superior matrix deposition and integration compared to de-differentiated chondrocytes.