In vitro chondrogenically differentiated mesenchymal stem cells (MSCs) have a tendency to undergo hypertrophy, mirroring the fate of transient "chondrocytes" in the growth plate. As hypertrophy would result in ossification, this fact limits their use in cartilage tissue engineering applications. During limb development, retinoic acid receptor (RAR) signaling exerts an important influence on cell fate of mesenchymal progenitors. While retinoids foster hypertrophy, suppression of RAR signaling seems to be required for chondrogenic differentiation. Therefore, we hypothesized that treatment of chondrogenically differentiating hMSCs with the RAR inverse agonist, BMS204,493 (further named BMS), would attenuate hypertrophy. We induced hypertrophy in chondrogenic precultured MSC pellets by the addition of bone morphogenetic protein 4. Direct activation of the RAR pathway by application of the physiological RAR agonist retinoic acid (RA) further enhanced the hypertrophic phenotype. However, BMS treatment reduced hypertrophic conversion in hMSCs, shown by decreased cell size, number of hypertrophic cells, and collagen type X deposition in histological analyses. BMS effects were dependent on the time point of application and strongest after early treatment during chondrogenic precultivation. The possibility of modifing hypertrophic cartilage via attenuation of RAR signaling by BMS could be helpful in producing stable engineered tissue for cartilage regeneration.