Using a combination of articular chondrocytes (ACs) and mesenchymal stromal cells (MSCs) has shown to be a viable option for a single-stage cell-based treatment of focal cartilage defects. However, there is still considerable debate whether MSCs differentiate or have a chondroinductive role through trophic factors. In addition, it remains unclear whether direct cell-cell contact is necessary for chondrogenesis. Therefore, the aim of this study was to investigate whether direct or indirect cell-cell contact between ACs and MSCs is essential for increased cartilage production in different cellular environments and elucidate the mechanisms behind these cellular interactions. Human ACs and MSCs were cultured in a 10:90 ratio in alginate beads, fibrin scaffolds, and pellets. Cells were mixed in direct cocultures, separated by a Transwell filter (indirect cocultures), or cultured with conditioned medium. Short tandem repeat analysis revealed that the percentages of ACs increased during culture, while those of MSCs decreased, with the biggest change in fibrin glue scaffolds. For alginate, where the lack of cell-cell contact could be confirmed by histological analysis, no difference was found in matrix production between direct and indirect cocultures. For fibrin scaffolds and pellet cultures, an increased glycosaminoglycan production and type II collagen deposition were found in direct cocultures compared with indirect cocultures and conditioned medium. Positive connexin 43 staining and transfer of cytosolic calcein indicated communication through gap junctions in direct cocultures. Taken together, these results suggest that MSCs stimulate cartilage formation when placed in close proximity to chondrocytes and that direct cell-cell contact and communication through gap junctions are essential in this chondroinductive interplay.