Articular cartilage repair remains a challenging problem. Based on a high-throughput screening and functional analysis, we found that fluocinolone acetonide (FA) in combination with transforming growth factor beta 3 (TGF-3) strongly potentiated chondrogenic differentiation of human bone marrow-derived mesenchymal stem cells (hBMSCs). In an in vivo cartilage defect model in knee joints of immunocompromised mice, transplantation of FA/TGF-3-treated hBMSCs could completely repair the articular surface. Analysis of the intracellular pathways revealed that FA enhanced TGF-3-induced phosphorylation of Smad2 and Smad3. Additionally, we performed a pathway array and found that FA activates the mTORC1/AKT pathway. Chemical inhibition of mTORC1 with rapamycin substantially suppressed FA effect, and inhibition of AKT completely repressed chondrogenesis of hBMSCs. Inhibition of glucocorticoid receptor with mifepristone also suppressed FA effect, suggesting that FA involves binding to the glucocorticoid receptor. Comparative analysis with other glucocorticoids (triamcinolone acetonide [TA] and dexamethasone [DEX]) revealed the unique ability of FA to repair articular cartilage surgical defects. Analysis of intracellular pathways showed that the mTORC1/AKT pathway and the glucocorticoid receptor was highly activated with FA and TA, but to a lesser extent with DEX. Collectively, these results show a unique ability of FA to enhance TGF-3-associated chondrogenesis, and suggest that the FA/TGF-3 combination may be used as major inducer of chondrogenesis in vitro. Additionally, FA/TGF-3 could be potentially applied in a clinical setting to increase the efficiency of regenerative approaches based on chondrogenic differentiation of stem cells. (c) 2015 American Society for Bone and Mineral Research.