A new type of TGF-β3 fusion protein with targeted therapy function was constructed, and its feasibility and target specificity of inducing chondrogenesis were investigated by transfecting LAP-MMP-mTGF-β3 gene into adipose-derived stem cells (ADSCs). The recombinant pIRES-EGFP-MMP was constructed by inserting the sense and antisense DNA of encoding the amino acid of the synthetic MMP enzyme cutting site into the eukaryotic expression vector pIRES-EGFP. LAP and mTGF-β3 fragments were obtained by using RT-PCR and inserted into the upstream and downstream of MMP from pIRES-EGFP-MMP respectively, and the recombinant plasmid of pIRES-EGFP-LAP-MMP-mTGF-β3 was constructed, which was transferred to ADSCs. The ADSCs were cultured and divided in three groups: experimental group (MMP group), negative control group (no MMP) and non-transfection group. The morphological changes were observed microscopically, and the expression of proteoglycan and type II collagen (ColII) was detected by using Alcian blue staining and immunohistochemistry staining at 7th, 14th and 21st day after culture. The recombinant plasmid of pIRES-EGFP-LAP-MMP-mTGF-β3 was correctly constructed by methods of enzyme cutting and sequencing analysis. The mTGF-β3 fusion protein was successfully expressed after transfection, and in the presence of the MMP, active protein mTGF-β3 was generated, which significantly promoted differentiation of ADSCs into chondrocytes and the expression of cartilage matrix. The novel fusion protein LAP-MMP-mTGF-β3 can targetedly induce differentiation of ADSCs into chondrocytes, which would open up prospects for target therapy of cartilage damage repair in future.