Icariin, a traditional Chinese medicine, has previously been demonstrated to promote chondrogenesis of bone marrow mesenchymal stem cells (BMSCs) in traditional 2D cell culture. The present study investigated whether icariin has the potential to promote stable chondrogenic differentiation of BMSCs without hypertrophy in a 3D microenvironment. BMSCs were cultivated in a self‑assembling peptide nanofiber hydrogel scaffold in chondrogenic medium for 3 weeks. Icariin was added to the medium throughout the culture period at concentrations of 1x10‑6 M. Chondrogenic differentiation markers, including collagen II and SRY‑type high mobility group box 9 (SOX9) were detected by immunofluorescence, reverse transcription‑quantitative polymerase chain reaction and toluidine blue staining. Hypertrophic differentiation was further assessed by detecting collagen X and collagen I gene expression levels and alkaline phosphatase activity. The results demonstrated that icariin significantly enhanced cartilage extracellular matrix synthesis and gene expression levels of collagen II and SOX9, and additionally promoted more chondrocyte‑like rounded morphology in BMSCs. Furthermore, chondrogenic medium led to hypertrophic differentiation via upregulation of collagen X and collagen I gene expression levels and alkaline phosphatase activity, which was not potentiated by icariin. In conclusion, these results suggested that icariin treatment may promote chondrogenic differentiation of BMSCs, and inhibit the side effect of growth factor activity, thus preventing further hypertrophic differentiation. Therefore, icariin may be a potential compound for cartilage tissue engineering.