Monolayer cultures of lapine articular chondrocytes were transduced with first-generation adenoviral vectors carrying lacZ or transforming growth factor beta1 genes under the transcriptional control of the human cytomegalovirus early promoter. High concentrations of transforming growth factor beta1 were produced by chondrocytes following transfer of the transforming growth factor beta1 gene but not the lacZ gene. Transduced chondrocytes responded to the elevated endogenous production of transforming growth factor beta1 by increasing their synthesis of proteoglycan, collagen, and noncollagenous proteins in a dose-dependent fashion. The increases in collagen synthesis were not accompanied by alterations in the collagen phenotype; type-II collagen remained the predominant collagen. Transforming growth factor beta1 could not, however, rescue the collagen phenotype of cells that had undergone phenotypic modulation as a result of serial passaging. These data demonstrate that chondrocytes can be genetically manipulated to produce and respond to the potentially therapeutic cytokine transforming growth factor beta1. This technology has a number of experimental and therapeutic applications, including those related to the study and treatment of arthritis and cartilage repair.