This study was undertaken to determine the effects of IL-1β and TGF-β1 on the expression of differentiation-associated genes in chondrocytes in vitro. Rat costal chondrocytes were exposed to different concentrations of IL-1β and TGF-β1 for 48 h and tested for gene expression. IL-1β increased the expression of aggrecanase-1 and aggrecanase-2 and decreased the content of aggrecan and collagen II. Low concentration of TGF-β1 decreased the expression of aggrecan and collagen II and increased the expression of aggrecanase-2. However, the level of aggrecanase-1 was significantly elevated in the presence of high concentration of TGF-β1. IL-1β and TGF-β1 show the ability to modulate the production of aggrecan and collagen II in chondrocytes in vitro.