Regeneration of articular cartilage remains a challenge for patients who have undergone cartilage injury, osteochondritis dissecans and osteoarthritis. Here, we describe a new recombinant silk fibroin with basic fibroblast growth factor (bFGF) binding peptide, which has a genetically introduced sequence PLLQATLGGGS, named P7. In this study, we cultured a human mesenchymal cell line derived from bone marrow, UE6E7-16, in wild-type fibroin sponge (FS) and recombinant silk fibroin sponge with P7 peptide (P7 FS). We compared cell proliferation, chondrogenic differentiation and cartilaginous tissue formation between the two types of sponge. After stimulation with bFGF at 3 ng/mL, P7 FS showed significantly higher cell growth (1.2-fold) and higher cellular DNA content (5.6-fold) than did wild-type FS. To promote chondrogenic differentiation, cells were cultured in the presence of TGF-β at 10 ng/mL for 28 days. Immunostaining of P7 FS showed SOX9-positive cells comparable to wild-type FS. Alcian-Blue staining of P7 FS also showed cartilaginous tissue formation equivalent to wild-type FS. A significant increase in cell proliferation in P7 FS implies future clinical application of this transgenic fibroin for regeneration of articular cartilage. To produce cartilaginous tissue efficiently, transgenic fibroin sponges and culture conditions must be improved. Such changes should include the selection of growth factors involved in chondrogenic differentiation and cartilage formation.