Traumatic articular cartilage lesions have a limited capacity to heal. We tested the hypothesis that overexpression of a human insulin-like growth factor I (IGF-I) cDNA by transplanted articular chondrocytes enhances the repair of full-thickness (osteochondral) cartilage defects in vivo. Lapine articular chondrocytes were transfected with expression plasmid vectors containing the cDNA for the Escherichia coli lacZ gene or the human IGF-I gene and were encapsulated in alginate. The expression patterns of the transgenes in these implants were monitored in vitro for 36 days. Transfected allogeneic chondrocytes in alginate were transplanted into osteochondral defects in the trochlear groove of rabbits. At three and 14 weeks, the quality of articular cartilage repair was evaluated qualitatively and quantitatively. In vitro, IGF-I secretion by implants constructed from IGF-I-transfected chondrocytes and alginate was 123.2+/-22.3 ng/10(7) cells/24 h at day 4 post transfection and remained elevated at day 36, the longest time point evaluated. In vivo, transplantation of IGF-I implants improved articular cartilage repair and accelerated the formation of the subchondral bone at both time points compared to lacZ implants. The data indicate that allogeneic chondrocytes, transfected by a nonviral method and cultured in alginate, are able to secrete biologically relevant amounts of IGF-I over a prolonged period of time in vitro. The data further demonstrate that implantation of these composites into deep articular cartilage defects is sufficient to augment cartilage defect repair in vivo. These results suggest that therapeutic growth factor gene delivery using encapsulated and transplanted genetically modified chondrocytes may be applicable to sites of focal articular cartilage damage.