Chondrocytes, the only cell type present in articular cartilage, regulate tissue homeostasis by a fine balance of metabolism that includes both anabolic and catabolic activities. Therefore, the biology of chondrocytes is critical for understanding cartilage metabolism. One major limitation when studying primary chondrocytes in culture is their loss of phenotype. To overcome this hurdle, limited attempts have been made to develop human chondrocyte cell lines that retain the phenotype for use as a good surrogate model. In this study, we report a novel approach to the establishment and characterization of human articular cartilage-derived chondrocyte cell lines. Adenoviral infection followed by culture of chondrocytes in 3-dimensional matrix within 48 h post-infection maintained the phenotype prior to clonal selection. Cells were then placed in culture either as monolayer, or in 3-dimensional matrix of alginate or agarose. The clones were characterized by their basal gene expression profile of chondrocyte markers. Based on type II collagen expression, 21 clones were analyzed for gene expression following treatment with IL-1 or BMP-7 and compared to similarly stimulated primary chondrocytes. This resulted in selection of two clones that retained the chondrocyte phenotype as evidenced by expression of type II collagen and other extra-cellular matrix molecules. In addition, one clone (AL-4-17) showed similar responses as primary chondrocytes when treated with IL-1 or BMP-7. In summary, this report provides a novel procedure to develop human articular cartilage-derived chondrocyte cell lines, which preserve important characteristics of articular chondrocytes and represent a useful model to study chondrocyte biology.