A distinctive cell was identified from sites of rheumatoid arthritis cartilage injury. Similar cells are not found in lesions of osteoarthritis cartilage. We have designated them as pannocytes (PCs). Their rhomboid morphology differs from the bipolar shape of fibroblast-like synoviocytes or the spherical configuration of primary human articular chondrocytes. Chondrocytes are short-lived, whereas the original PC line grew for 25 passages before becoming senescent. Features in common with cultured primary chondrocytes include maximal proliferation in response to transforming growth factor-beta a catabolic response to interleukin-1 beta, collagenase production, and mRNA for the induced lymphocyte antigen and inducible nitric oxide synthase. Despite the presence of the inducible nitric oxide synthase message, PCs do not produce NO either constitutively or when cytokine stimulated. Each of the mesenchymal cells, fibroblast-like synoviocytes, primary chondrocytes, and PCs have the gene for type I collagen, but the type II collagen gene is detected only in primary chondrocytes. PCs can be distinguished from fibroblast-like synoviocytes and primary chondrocytes by their morphology, bright VCAM-1 staining, and growth response to cytokines and growth factors. Their prolonged life span in vitro suggests that PCs might represent an earlier stage of mesenchymal cell differentiation, and they could have a heretofore unrecognized role in rheumatoid arthritis joint destruction.