In vivo niche plays an important role in directing differentiation fate of stem cells. Due to lack of proper chondrogenic niche, stable cartilage regeneration of bone marrow stromal cells (BMSCs) in subcutaneous environments is always a great challenge. The current study demonstrated that chondrocyte sheet generated by high-density culture of chondrocytes in vitro could cearte a chondrogenic niche in subcutaneous environment and efficiently retain the chondrogenic phenotype of in vitro BMSC engineered cartilage (vitro-BEC). Furthermore, cell tracing results revealed that the regenerated cartilage mainly derived from the implanted vitro-BEC. The current study not only proposes a novel research model for microenvironment simulation but also provides a useful strategy for stable ectopic cartilage regeneration of stem cells.