Stem cell based musculoskeletal tissue-engineering presents the unique opportunity to repair or replace dysfunctional cells in degenerating tissue. In this context, one goal of tissue engineering is to propagate stem cells that can then be reintroduced into the degenerating tissue to repair or replace dysfunctional cells, restore the physical and biochemical properties of the tissue, and re-establish normal function. In particular, mesenchymal stem cells (MSC) are useful in the treatment of musculoskeletal degenerative conditions such as degenerative disc disease and osteoarthritis. MSCs are abundant, relatively easy to isolate, and can differentiate into a variety of cell types. However, the ischemic and inflammatory environment characteristic of injured tissues proves hostile for the direct introduction of MSCs, which often do not survive in this setting. While growth factors are commonly used to pre-differentiate MSCs into chondrocytes prior to their use, this can cause terminal differentiation and cell hypertrophy that leads to inferior extracellular matrix material properties. Instead, pellet culture systems are better suited for tissue engineering because they can mimic certain embryonic microenvironments that stimulate stable cell differentiation and better support the regenerative process.