Restoration of cartilage defect remains a challenge, as the current treatments are ineffective to return tissue to its health. Thus, developing therapies for treatment of cartilage tissue damage caused by common joint diseases including osteoarthritis, rheumatoid arthritis, and accidents is crucial Sulfated glycosaminoglycan molecules are vital constituents of both developing and mature cartilage extracellular matrix. The interplay between regulator proteins and glycosaminoglycan molecules has an essential role in coordinating differentiation, expansion, and patterning during cartilage development. In this study, we exploited the functional role of an extracellular matrix on chondrogenic differentiation by imitating extracellular matrix both chemically by imparting functional groups of native glycosaminoglycans and structurally through peptide nanofiber network. For this purpose, sulfonate, carboxylate, and hydroxyl groups were incorporated on self-assembled peptide nanofibers. We observed that when ATDC5 cells were cultured on functional peptide nanofibers, they rapidly aggregated in insulin-free medium and formed cartilage-like nodules and deposited sulfated glycosaminoglycans shown by Safranin-O staining. Moreover, collagen U and aggrecan gene expressions revealed by qRT-PCR were significantly enhanced, which indicated the remarkable bioactive role of this nanofiber system on chondrogenic differentiation. Overall, these results show that glycosaminoglycan mimetic peptide nanofiber system provides a promising platform for cartilage regeneration.