The aim of this study was to evaluate a cell-seeded nanofibrous scaffold for cartilage repair in vivo. We used a biodegradable poly(epsilon-caprolactone) (PCL) nanofibrous scaffold seeded with allogeneic chondrocytes or xenogeneic human mesenchymal stem cells (MSCs), or acellular PCL scaffolds, with no implant as a control to repair iatrogenic, 7 mm full-thickness cartilage defects in a swine model. Six months after implantation, MSC-seeded constructs showed the most complete repair in the defects compared to other groups. Macroscopically, the MSC-seeded constructs regenerated hyaline cartilage-like tissue and restored a smooth cartilage surface, while the chondrocyte-seeded constructs produced mostly fibrocartilage-like tissue with a discontinuous superficial cartilage contour. Incomplete repair containing fibrocartilage or fibrous tissue was found in the acellular constructs and the no-implant control group. Quantitative histological evaluation showed overall higher scores for the chondrocyte- and MSC-seeded constructs than the acellular construct and the no-implant groups. Mechanical testing showed the highest equilibrium compressive stress of 1.5 MPa in the regenerated cartilage produced by the MSC-seeded constructs, compared to 1.2 MPa in the chondrocyte-seeded constructs, 1.0 MPa in the acellular constructs and 0.2 MPa in the no-implant group. No evidence of immune reaction to the allogeneically- and xenogeneically-derived regenerated cartilage was observed, possibly related to the immunosuppressive activities of MSCs, suggesting the feasibility of allogeneic or xenogeneic transplantation of MSCs for cell-based therapy. Taken together, our results showed that biodegradable nanofibrous scaffolds seeded with MSCs effectively repair cartilage defects in vivo, and that the current approach is promising for cartilage repair.