While chondrogenesis of mesenchymal stem cells (MSCs) in vitro has been extensively studied, their participation in cartilage tissue repair remains unresolved. This study was designed to elucidate if MSCs affect the phenotype of articular chondrocytes (ACs). A combination of noncontact coculture modes was developed. Human or rabbit MSCs and rabbit ACs (rACs) were encapsulated in alginate hydrogel beads [three-dimensional (3D)] or cultured in a monolayer [two-dimensional (2D)] and subsequently cocultured in the Transwell(®) system. After coculture, cell morphology, growth, deposition of the cartilaginous extracellular matrix (ECM), and gene expression of rACs were investigated. It was found that upon coculture without a cell-cell contact, both 2D and 3D cultured MSCs dramatically induced the morphological transformation of 2D cultured rACs from round to a spindle-like shape, and however inhibited the generation of cellular aggregates of 3D cultured rACs. Most strikingly, a coculture resulted in a significantly less deposition of the cartilaginous ECM, including glycosaminoglycans and collagen type II by both 2D and 3D cultured rACs. Importantly, similar observations were achieved for rACs cultured in an MSC-conditioned medium, confirming the definite paracrine interactions between MSCs and rACs. Based on the analysis of gene expression, this phenotypic change of rACs was not identical as the dedifferentiation. To the best of our knowledge, this is a first study demonstrating that MSCs could downregulate chondrocytic differentiation of ACs and warrants considerations in cartilage tissue repair.