MSCs are known as multipotent mesenchymal stem cells that have been found capable of differentiating into various lineages including cartilage. However, recent studies suggest MSCs are pericytes that stimulate tissue repair through trophic signaling. Aimed at articular cartilage repair in a one-stage cell transplantation, this study provides first clinical evidence that MSCs stimulate autologous cartilage repair in the knee without engrafting in the host tissue. A phase I (first-in-man) clinical trial studied the one-stage application of allogeneic MSCs mixed with 10% or 20% recycled defect derived autologous chondrons for the treatment of cartilage defects in 35 patients. No treatment-related serious adverse events were found and statistically significant improvement in clinical outcome shown. Magnetic resonance imaging and second-look arthroscopies showed consistent newly formed cartilage tissue. A biopsy taken from the center of the repair tissue was found to have hyaline-like features with a high concentration of proteoglycans and type II collagen. DNA short tandem repeat analysis delivered unique proof that the regenerated tissue contained patient-DNA only. These findings support the hypothesis that allogeneic MSCs stimulate a regenerative host response. This first-in-man trial supports a paradigm shift in which MSCs are applied as augmentations or “signaling cells” rather than differentiating stem cells and opens doors for other applications.