Gene therapy with insulin-like growth factor-1 (IGF-1) increases matrix production and enhances chondrocyte proliferation and survival in vitro. The purpose of this study was to determine whether arthroscopically-grafted chondrocytes genetically modified by an adenovirus vector encoding equine IGF-1 (AdIGF-1) would have a beneficial effect on cartilage healing in an equine femoropatellar joint model. A total of 16 horses underwent arthroscopic repair of a single 15 mm cartilage defect in each femoropatellar joint. One joint received 2 × 107 AdIGF-1 modified chondrocytes and the contralateral joint received 2 × 107 naive (unmodified) chondrocytes. Repairs were analysed at four weeks, nine weeks and eight months after surgery. Morphological and histological appearance, IGF-1 and collagen type II gene expression (polymerase chain reaction, in situ hybridisation and immunohistochemistry), collagen type II content (cyanogen bromide and sodium dodecyl sulphate-polyacrylamide gel electrophoresis), proteoglycan content (dimethylmethylene blue assay), and gene expression for collagen type 1, matrix metalloproteinase (MMP)-1, MMP-3, MMP-13, aggrecanase-1, tissue inhibitor of matrix metalloproteinase-1 (TIMP-1) and TIMP-3 were evaluated. Genetic modification of chondrocytes significantly increased IGF-1 mRNA and ligand production in repair tissue for up to nine weeks following transplantation. The gross and histological appearance of IGF-1 modified repair tissue was improved over control defects. Gross filling of defects was significantly improved at four weeks, and a more hyaline-like tissue covered the lesions at eight months. Histological outcome at four and nine weeks post-transplantation revealed greater tissue filling of defects transplanted with genetically modified chondrocytes, whereas repair tissue in control defects was thin and irregular and more fibrous. Collagen type II expression in IGF-1 gene-transduced defects was increased 100-fold at four weeks and correlated with increased collagen type II immunoreaction up to eight months. Genetic modification of chondrocytes with AdIGF-1 prior to transplantation improved early (four to nine weeks), and to a lesser degree long-term, cartilage healing in the equine model. The equine model of cartilage healing closely resembles human clinical cartilage repair. The results of this study suggest that cartilage healing can be enhanced through genetic modification of chondrocytes prior to transplantation.