Transduction of partially dedifferentiated rabbit chondrocytes with a baculovirus (Bac-CB) expressing bone morphogenetic protein-2 (BMP-2) reverses dedifferentiation and enhances matrix production. Hereby we examined whether transduction with Bac-CB in combination with another baculovirus expressing transforming growth factor-beta1 (TGF-beta1) or insulin-like growth factor-1 (IGF-1) synergistically augmented chondrogenic differentiation. Passage 3 rabbit articular chondrocytes were transduced by different baculovirus combinations: single transduction with Bac-CB, cotransduction with Bac-CB and Bac-CT (expressing TGF-beta1), cotransduction with Bac-CB and Bac-CI (expressing IGF-1), and transduction with Bac-CB followed by repeated transduction with Bac-CT, Bac-CI, or Bac-CB 5 days later. Transduced cells were encapsulated into alginate beads for culture. Among these strategies, only cotransduction with Bac-CB and Bac-CT led to improved redifferentiation when compared with Bac-CB single transduction, as evidenced by the enhanced expression of aggrecan and collagen IIB (Col IIB), suppressed expression of Col I and Col X, emergence of chondrocyte-specific lacunae, and elevated deposition of matrix molecules. The cotransduction also accelerated the expression of Sox9, Col IIB, and aggrecan. In summary, baculovirus-mediated coexpression of TGF-beta1 and BMP-2 synergistically accelerates the chondrocyte redifferentiation process and improves the maintenance of chondrocyte phenotype and accumulation of cartilage-specific matrix molecules.