Traditionally, mesenchymal stem cells (MSCs) isolated from adult bone marrow were described as being capable of differentiating to various lineages including cartilage. Despite increasing interest in these MSCs, concerns regarding their safety, in vivo behavior and clinical effectiveness have restrained their clinical application. We hypothesized that MSCs have trophic effects that stimulate recycled chondrons (chondrocytes with their native pericellular matrix) to regenerate cartilage. Searching for a proof of principle, this phase I (first-in-man) clinical trial applied allogeneic MSCs mixed with either 10% or 20% recycled autologous cartilage-derived cells (chondrons) for treatment of cartilage defects in the knee in symptomatic cartilage defect patients. This unique first in man series demonstrated no treatment-related adverse events up to one year postoperatively. At 12 months, all patients showed statistically significant improvement in clinical outcome compared to baseline. Magnetic resonance imaging and second-look arthroscopies showed completely filled defects with regenerative cartilage tissue. Histological analysis on biopsies of the grafts indicated hyaline-like regeneration with a high concentration of proteoglycans and type II collagen. Short tandem repeat analysis showed the regenerative tissue only contained patient-own DNA. These findings support the novel insight that the use of allogeneic MSCs is safe and opens opportunities for other applications. Stem cell-induced paracrine mechanisms may play an important role in the chondrogenesis and successful tissue regeneration found. Stem Cells 2017;35:256–264.