Introduction:　A　potent　mesenchymal　stem　cell　(MSC)　population　was　recently　isolated　from　the　Wharton＇s　jelly　of　human　umbilical　cord　(UC).　The　aim　of　the　current　experiments　was　to　determine　the　potential　of　human　UC-derived　MSC　(UC-MSC)　in　cartilage　healing.　Materials　and　methods:　Chondrogenic　differentiation　of　collagen　hydrogel-embedded　cells　was　induced　in　standard　chondrocyte　conditioning　medium　and　further　detected　by　real-time　PCR,　histochemistry　and　immunohistochemistry　analyses.　Cell　viability　and　apoptosis　of　the　MSCs　in　the　collagen　I　hydrogels　were　monitored　using　apoptosis　detection　kit.　Results:　Cells　isolated　from　UC　were　positive　for　MSC　biomarkers　and　negative　for　haematopoietic　lineage　and　endothelial　biomarkers　and　possess　the　capacity　to　differentiate　along　osteogenic　lineage.　UC-MSCs　embedded　in　collagen　hydrogel　can　undergo　chondrogenesis　characterised　by　significantly　increased　expressions　of　collagen　II,　aggrecan,　COMP　(cartilage　oligomeric　matrix　protein)　and　sox9　after　exposed　cells-embedded　hydrogels　to　chondrogenic　factors.　The　most　of　cells　remained　viable　throughout　the　hydrogels　after　3　weeks　of　cultivation　in　chondrogenic　differentiation　medium.　Conclusions:　Collagen　hydrogel　can　provide　an　appropriate　3-D　environment　for　the　chondrogenesis　of　UC-MSCs.　UC-MSCs　embedded　in　biocompatible　scaffold　may　have　great　potential　for　cartilage　engineering.　(C)　2012　Elsevier　Ltd.　All　rights　reserved.