Bone morphogenetic protein 2 (BMP2) is one of the key chondrogenic growth factors involved in the cartilage regeneration. However, it also exhibits osteogenic abilities and triggers endochondral ossification. Effective chondrogenesis and inhibition of BMP2-induced osteogenesis and endochondral ossification can be achieved by directing the mesenchymal stem cells (MSCs) towards chondrocyte lineage with chodrogenic factors, such as Sox9. Here we investigated the effects of Sox9 on BMP2-induced chondrogenic and osteogenic differentiation of MSCs. We found exogenous overexpression of Sox9 enhanced the BMP2-induced chondrogenic differentiation of MSCs in vitro. Also, it inhibited early and late osteogenic differentiation of MSCs in vitro. Subcutaneous stem cell implantation demonstrated Sox9 potentiated BMP2-induced cartilage formation and inhibited endochondral ossification. Mouse limb cultures indicated that BMP2 and Sox9 acted synergistically to stimulate chondrocytes proliferation, and Sox9 inhibited BMP2-induced chondrocytes hypertrophy and ossification. This study strongly suggests that Sox9 potentiates BMP2-induced MSCs chondrogenic differentiation and cartilage formation, and inhibits BMP2-induced MSCs osteogenic differentiation and endochondral ossification. Thus, exogenous overexpression of Sox9 in BMP2-induced mesenchymal stem cells differentiation may be a new strategy for cartilage tissue engineering.