The regeneration of diseased hyaline cartilage continues to be a great challenge, mainly because degeneration—caused either by major injury or by age-related processes—can overextend the tissue's self-renewal capacity. We show that repair tissue from human articular cartilage during the late stages of osteoarthritis harbors a unique progenitor cell population, termed chondrogenic progenitor cells (CPCs). These exhibit stem cell characteristics such as clonogenicity, multipotency, and migratory activity. The isolated CPCs, which exhibit a high chondrogenic potential, were shown to populate diseased tissue ex vivo. Moreover, downregulation of the osteogenic transcription factor runx-2 enhanced the expression of the chondrogenic transcription factor sox-9. This, in turn, increased the matrix synthesis potential of the CPCs without altering their migratory capacity. Our results offer new insights into the biology of progenitor cells in the context of diseased cartilage tissue. Our work may be relevant in the development of novel therapeutics for the later stages of osteoarthritis.