The generation of large quantities of genetically defined human chondrocytes remains a critical step for the development of tissue engineering strategies for cartilage regeneration and high-throughput drug screening. This protocol describes chondrogenic differentiation of human-induced pluripotent stem cells (hiPSCs), which can undergo genetic modification and the capacity for extensive cell expansion. The hiPSCs are differentiated in a stepwise manner in monolayer through the mesodermal lineage for 12 days using defined growth factors and small molecules. This is followed by 28 days of chondrogenic differentiation in a 3D pellet culture system using transforming growth factor beta 3 and specific compounds to inhibit off-target differentiation. The 6-week protocol results in hiPSC-derived cartilaginous tissue that can be characterized by histology, immunohistochemistry, and gene expression or enzymatically digested to isolate chondrocyte-like cells. Investigators can use this protocol for experiments including genetic engineering, in vitro disease modeling, or tissue engineering.