Human umbilical cord (hUC)- or bone marrow (hBM)-derived mesenchymal stromal cells (MSCs) were evaluated as an allogeneic source of cells for cartilage repair. We aimed to determine if they could enhance healing of chondral defects with or without the recruitment of endogenous cells. hMSCs were applied into a focal joint surface injury in knees of adult mice expressing tdTomato fluorescent protein in cells descending from Gdf5-expressing embryonic joint interzone cells. Three experimental groups were used: (i) hUC-MSCs, (ii) hBM-MSCs and (iii) PBS (vehicle) without cells. Cartilage repair was assessed after 8 weeks and tdTomato-expressing cells were detected by immunostaining. Plasma levels of pro-inflammatory mediators and other markers were measured by electrochemiluminescence. Both hUC-MSC (n = 14, p = 0.009) and hBM-MSC (n = 13, p = 0.006) treatment groups had significantly improved cartilage repair compared to controls (n = 18). While hMSCs were not detectable in the repair tissue at 8 weeks post-implantation, increased endogenous Gdf5-lineage cells were detected in repair tissue of hUC-MSC-treated mice. This xenogeneic study indicates that hMSCs enhance intrinsic cartilage repair mechanisms in mice. Hence, hMSCs, particularly the more proliferative hUC-MSCs, could represent an attractive allogeneic cell population for treating patients with chondral defects and perhaps prevent the onset and progression of osteoarthritis.