Bone marrow derived mesenchymal stem cells (MSCs) can be used to repair articular cartilage defects, these cells should be properly stimulated so that they could differentiate morphologically and hold cellular synthetic features closer to maturely differentiated chondrocytes. It is well known that tissue specific environment plays an important role in cell fate determination. Once improved isolation, proliferation and differentiation protocols have been developed, the likelihood of spontaneous differentiation of MSCs into divergent lineages will be reduced, thus increasing their value for cartilage repair. The purpose of this study was to improve chondrogenic differentiation of equine MSCs using coculture with mature equine articular chondrocytes (ACs), along with the determination of the effect of adding transforming growth factor (TGF) beta1 in the pellet culture system. Following confirmation of multilineage (adipogenic, osteogenic and chondrogenic) differentiation, isolated MSCs, ACs and coculture of both cell types were transferred into pellet culture system in a DMEM-based medium supplemented with or without TGFbetal. Chondrogenic differentiation was evaluated histologically and the relative mRNA expressions of collagen type 1 alpha1 (COL1A1), collagen type 2 alpha1 (COL2A1), aggrecan (ACAN) and SRY-box 9 (SOX9) were estimated by quantitative RT-PCR. Cocultured cells showed diffuse distribution of extracellular matrix (ECM), whereas in chondrocyte pellets it was more localized to central regions. Expression of COL2A1, ACAN and SOX9 genes were higher in cocultured pellets when compared to MSCs and ACs-composed pellets. Addition of TGFbeta1 in chondrogenic differentiating medium did not consistently amplify expression of the above mentioned genes. Differentiation of equine MSCs was enhanced by coculturing in association with mature ACs, improving expression of cartilage-specific genes and producing a more homogeneous production of ECM within the newly formed cocultured cartilage. The use of the coculture system could possibly enhance the capacity of MSC-derived chondrocytes to build up stable articular cartilage-like constructs, which could play an important role in articular cartilage repair and regeneration.