The main purpose of this work has been to establish a new culturing technique to improve the chondrogenic commitment of isolated adult human chondrocytes, with the aim of being used during cell-based therapies or tissue engineering strategies. By using a rather novel technique to generate scaffold-free three-dimensional (3D) structures from in vitro expanded chondrocytes, we have explored the effects of different culture environments on cartilage formation. Three-dimensional chondrospheroids were developed by applying the hanging-drop technique. Cartilage tissue formation was attempted after combining critical factors such as serum-containing or serum-free media and atmospheric (20%) or low (2.5%) oxygen tensions. The quality of the formed microtissues was analyzed by histology, immunohistochemistry, electron microscopy, and real-time PCR, and directly compared with native adult cartilage. Our results revealed highly organized, 3D tissue-like structures developed by the hanging-drop method. All culture conditions allowed formation of 3D spheroids; however, cartilage generated under low oxygen tension had a bigger size, enhanced matrix deposition, and higher quality of cartilage formation. Real-time PCR demonstrated enhanced expression of cartilage-specific genes such us collagen type II and aggrecan in 3D cultures when compared to monolayers. Cartilage-specific matrix proteins and genes expressed in hanging-drop-developed spheroids were comparable to the expression obtained by applying the pellet culture system. In summary, our results indicate that a combination of 3D cultures of chondrocytes in hanging drops and a low oxygen environment represent an easy and convenient way to generate cartilage-like microstructures. We also show that a new specially tailored serum-free medium is suitable for in vitro cartilage tissue formation. This new methodology opens up the possibility of using autogenously produced solid 3D structures with redifferentiated chondrocytes as an attractive alternative to the currently used autologous chondrocyte transplantation for cartilage repair.