Articular cartilage repair and regeneration provides a substantial challenge in Regenerative Medicine because of the high degree of morphological and mechanical complexity intrinsic to hyaline cartilage due, in part, to its extracellular matrix. Cartilage remains one of the most difficult tissues to heal; even state-of-the-art regenerative medicine technology cannot yet provide authentic cartilage resurfacing. Mesenchymal stem cells (MSCs) were once believed to be the panacea for cartilage repair and regeneration, but despite years of research, they have not fulfilled these expectations. It has been observed that MSCs have an intrinsic differentiation program reminiscent of endochondral bone formation, which they follow after exposure to specific reagents as a part of current differentiation protocols. Efforts have been made to avoid the resulting hypertrophic fate of MSCs; however, so far, none of these has recreated a fully functional articular hyaline cartilage without chondrocytes exhibiting a hypertrophic phenotype. We reviewed the current literature in an attempt to understand why MSCs have failed to regenerate articular cartilage. The challenges that must be overcome before MSC-based tissue engineering can become a front-line technology for successful articular cartilage regeneration are highlighted.