Osteoarthritis is a leading cause of disability for which there is no cure. We have discovered that the multidomain signalling protein Agrin, most commonly known for its requirement at the neuromuscular junction, strongly promotes chondrocyte differentiation and cartilage formation in vivo. Agrin is expressed in normal cartilage but absent in osteoarthritis. In vitro, Agrin knockdown resulted in the downregulation of the cartilage transcription factor SOX9 and other cartilage-specific extracellular matrix molecules. Conversely, the addition of exogenous Agrin supported cartilage differentiation in vitro and ectopic cartilage formation in vivo. In contrast to other biological contexts where Agrin signalling requires the interaction with either LRP4 or α-dystroglycan, chondrocytes require the presence of both receptors. Our results identify Agrin as a novel potent anabolic growth factor with strong therapeutic potential in cartilage regeneration.