Baculovirus has emerged as a new gene delivery vector thanks to a number of advantages. This study demonstrated that baculovirus conferred efficient gene delivery and mediated expression of growth factors (TGF-beta1, IGF-1 and BMP-2) to therapeutic levels in rabbit chondrocytes. Interestingly, the cellular response to growth factor stimulation was dependent on the cell passage. The highly de-differentiated passage 5 (P5) chondrocytes failed to respond to the stimulation by either growth factor. The de-differentiated P3 cells also failed to maintain the chondrocyte phenotype, but baculovirus-mediated BMP-2 expression remarkably reversed the de-differentiation and enhanced the aggrecan and collagen II production in 2D and 3D cultures, as evidenced by cell morphology, histological staining and gene expression analyses. Baculovirus-mediated TGF-beta1 expression modestly enhanced the cartilage-specific matrix production, although to a lesser extent. Intriguingly, IGF-1, a well-known chondroinductive protein, failed to stimulate the P3 cells likely due to the loss of IGF-1 receptor expression. In summary, this study proved for the first time the potentials of baculovirus in modulating the differentiation status of chondrocytes in the context of cartilage tissue engineering, but also highlighted the importance of selecting appropriate cell passage and growth factor for genetic manipulation.