ABSTRACT A mouse organoid culture model was developed to regenerate articular cartilage by sequential treatment with BMP2 and BMP9 (or GDF2) that parallels induced joint regeneration at digit amputation wounds in vivo. BMP9-induced chondrogenesis was used to identify clonal cell lines for articular chondrocyte and hypertrophic chondrocyte progenitor cells from digit fibroblasts. A protocol that includes cell aggregation enhanced by BMP2 followed by BMP9-induced chondrogenesis resulted in the differentiation of organized layers of articular chondrocytes, similar to the organization of middle and deep zones of articular cartilage in situ, and retained a differentiated phenotype following transplantation. In addition, the differentiation of a non-chondrogenic connective tissue layer containing articular chondrocyte progenitor cells demonstrated that progenitor cell sequestration is coupled with articular cartilage differentiation at a clonal level. The studies identify a dormant endogenous regenerative program for a non-regenerative tissue in which fibroblast-derived progenitor cells can be induced to initiate morphogenetic and differentiative programs that include progenitor cell sequestration. The identification of dormant regenerative programs in non-regenerative tissues such as articular cartilage represents a novel strategy that integrates regeneration biology with regenerative medicine.