The objective of this study was to investigate the hypothesis that the application of dynamic compression following transforming growth factor-β3 (TGF-β3) induced differentiation will further enhance chondrogenesis of mesenchymal stem cells (MSCs). Porcine MSCs were encapsulated in agarose hydrogels and cultured in a chemically defined medium with TGF-β3 (10 ng/mL). Dynamic compression (1 Hz, 10% strain, 1 h/day) was initiated at either day 0 or day 21 and continued until day 42 of culture; with TGF-β3 withdrawn from some groups at day 21. Biochemical and mechanical properties of the MSC-seeded constructs were evaluated up to day 42. The application of dynamic compression from day 0 inhibited chondrogenesis of MSCs. This inhibition of chondrogenesis in response to dynamic compression was not observed if MSC-seeded constructs first underwent 21 days of chondrogenic differentiation in the presence of TGF-β3. Spatial differences in sGAG accumulation in response to both TGF-β3 stimulation and dynamic compression were observed within the constructs. sGAG release from the engineered construct into the surrounding culture media was also dependent on TGF-β3 stimulation, but was not effected by dynamic compression. Continued supplementation with TGF-β3 appeared to be a more potent chondrogenic stimulus than the application of 1 h of daily dynamic compression following cytokine initiated differentiation. In the context of cartilage tissue engineering, the results of this study suggest that MSC seeded constructs should be first allowed to undergo chondrogenesis in vitro prior to implantation in a load bearing environment.