The study is to investigate the chondrogenesis of a kind of modified cell pellet formed using mesenchymal stern cells (MSCs) and gelatin microspheres containing transforming growth factor beta 3 (TGF-beta 3). The gelatin microspheres loaded with TGF-beta 3 (MS-TGF) were prepared and showed the controlled release of cytokine in a biphasic fashion. Then the mixture of MSCs and MS-TGF was centrifuged to form pellet. The pellet was cultured over 4 weeks to determine the effects of MS-TGF on cartilage matrix production by biochemical analysis, immunohistochemistry staining, and Western blot test. The transcription level of cartilage-related genes was also evaluated by real-time quantitative RT-PCR assay. After.4 weeks of culture, the MSCs were distributed uniformly in the pellet and had good viability. Cells showed faster proliferation and higher DNA content compared to MSCs in a conventional pellet. The production of collagen and glycosaminoglycan also increased significantly. The immunohistochemistry staining and alcian blue staining confirmed the synthesis of cartilage extracellular matrix (ECM). Furthermore, the differentiated MSCs located in lacunae within the metachromatic staining matrix exhibited the typical chondrocyte morphology. The chondrogenic differentiation of MSCs was proved by the expression of collagen 11 gene in mRNA and protein level. The results indicate that MS-TGF can induce chondrogenic differentiation of MSCs and increase cartilage ECM production, which result in a bigger cartilage pellet. In conclusion, this modified pellet culture can provide an easy and effective way to construct the tissue-engineered cartilage in vitro.