Chondrocyte hypertrophy is a hallmark of osteoarthritis (OA) pathology. In the present study, we elucidated the mechanism underlying the relationship between the hypertrophy/apoptotic phenotype and OA pathogenesis in bone marrow-derived mesenchymal stem cells (BM-MSCs) via gene targeting of distal-less homeobox 5 (DLX5). Our primary objectives were (1) to determine whether DLX5 is a predictive biomarker of cellular hypertrophy in human osteoarthritic tissues; (2) To determine whether modulating DLX5 activity can regulate cell hypertrophy in mesenchymal stem/progenitor cells from marrow and cartilage. Whole transcriptome sequencing was performed to identify differences in the RNA expression profile between human-cartilage-derived mesenchymal progenitors (C-PCs) and bone-marrow-derived mesenchymal progenitors (BM-MSCs). Ingenuity Pathway Analysis (IPA) software was used to compare molecular pathways known to regulate hypertrophic terminal cell differentiation. RT-qPCR was used to measure DLX5 and hypertrophy marker COL10 in healthy human chondrocytes and OA chondrocytes. DLX5 was knocked down or overexpressed in BM-MSCs and C-PCs and RT-qPCR were used to measure the expression of hypertrophy/terminal differentiation markers following DLX5 modulation. Apoptotic cell activity was characterized by immunostaining for cleaved caspase 3/7. We demonstrate that DLX5 and downstream hypertrophy markers were significantly upregulated in BM-MSCs, relative to C-PCs. DLX5 and COL10 were also significantly upregulated in cells from OA knee joint tissues, relative to normal non-arthritic joint tissues. Knocking down DLX5 in BM-MSCs inhibited cell hypertrophy and apoptotic activity without attenuating their chondrogenic potential. Overexpression of DLX5 in C-PCs stimulated hypertrophy markers and increased apoptotic cell activity. Modulating DLX5 activity regulates cell hypertrophy and apoptosis in BM-MSCs and C-PCs. These findings suggest that DLX5 is a biomarker of OA changes in human knee joint tissues and confirms the DLX5 mechanism contributes to hypertrophy and apoptosis in BM-MSCs.