OBJECTIVE To investigate the effect of chondromodulin 1 on the phenotype of osteochondral progenitor cells in cartilage repair tissue. METHODS Self-complementary adeno-associated virus (AAV) vectors carrying chondromodulin 1 complementary DNA (AAV-Chm-1) were applied to cartilage lesions in the knee joints of miniature pigs that were treated by the microfracture technique. Alternatively, isolated porcine osteochondral progenitor cells were infected with AAV-Chm-1 or with AAV-GFP control vectors ex vivo prior to being transplanted into cartilage lesions in which the subchondral bone plate was left intact. The quality of the repair tissue and the degree of endochondral ossification were assessed by histochemical and immunohistochemical methods. The effects of chondromodulin 1 overexpression were also analyzed by angiogenesis assays and quantitative reverse transcriptase-polymerase chain reaction. RESULTS AAV-Chm-1-infected cells efficiently produced chondromodulin 1, which had strong antiangiogenic effects, as verified by the inhibition of tube formation of endothelial cells. Gene expression analyses in vitro revealed the cell cycle inhibitor p21WAF1/Cip1 as one target up-regulated by AAV-Chm-1. Direct application of AAV-Chm-1 vectors into microfractured porcine cartilage lesions stimulated chondrogenic differentiation of ingrowing progenitor cells, but significantly inhibited terminal chondrocyte hypertrophy, the invasion of vessel structures, and excessive endochondral ossification, which were otherwise observed in untreated lesions. Indirect gene transfer, with infection of porcine osteochondral progenitor cells by AAV-Chm-1 ex vivo, also supported chondrogenic differentiation of these transplanted cells. AAV-Chm-1-infected cells maintained a chondrocyte-like phenotype and formed a hyaline-like matrix that was superior to that formed by uninfected or AAV-GFP-infected cells. CONCLUSIONS Our findings indicate that the antiangiogenic factor chondromodulin 1 stabilizes the chondrocyte phenotype by supporting chondrogenesis but inhibiting chondrocyte hypertrophy and endochondral ossification.