Human embryonic stem cells (hESCs) have great potential for the repair of damaged articular cartilage. We developed a serum-free 14-day protocol for hESC differentiation into chondrocyte progenitors, which surprisingly lacked strong cartilage matrix production in in vitro tests. In order to direct these progenitors to a more mature phenotype, we investigated substituting different members of the TGFβ family in the protocol. Initially, we supplemented, or substituted GDF5 (day 11-14), with combinations of BMP7 and TGFβ-1, or -3, but these modifications yielded no improvement in matrix gene expression. However, replacing BMP4 with BMP2 (days 3-10 of the protocol) resulted in a more rapid increase in SOX9 gene expression and increased expression of chondrogenic genes SOX5, ACAN and COL2A1. The replacement of BMP4 with BMP2 also enhanced the formation of chondrogenic cell aggregates, with greater deposition of type II collagen. This change was not accompanied by hypertrophic chondrocyte marker COL10A1 expression. The results demonstrate that BMP2 has greater specificity for the generation of chondrogenic cells from hESCs than BMP4 and this was consistent in two hESC lines (HUES1 and MAN7). hESC-chondrogenic cells derived with either BMP2 or BMP4 were tested in vivo by implanting them in fibrin into osteochondral defects in the femur of RNU rats. Repaired cartilage tissue, positive for Safranin O and type II collagen was detected at 6 and 12 weeks with both cell sources, but the BMP2 cells scored higher for tissue quality (Pineda score). Therefore, BMP2 is more effective at driving chondrogenic differentiation from human pluripotent stem cells than BMP4 and the effect on the resulting chondroprogenitors is sustained in an in vivo setting.