Culturing chondrocytes under oxygen tension closely resembling their in vivo environment has been shown to have positive effects on matrix synthesis. In redifferentiation of expanded chondrocytes, hypoxia increased collagen type II expression. However, the mechanism by which hypoxia enhances redifferentiation is still unknown. We employed novel bioreactor technology to investigate the role of TGF-β, a growth factor heavily implicated in matrix production, in chondrocytes under hypoxia. Dedifferentiated chondrocytes in alginate were cultured for 48h under hypoxic (1% pO2) or normoxic (20%) conditions, using specialized bioreactor technology. Hypoxia induced gene expression (GDF1-, PHD3, HAS2, VEGF, COX2), chondrocyte markers (SOX9, COL2, COL1, AGC1 and MMP13), as well as components of the TGF-β signaling pathway (TGF-β isoforms, receptors, and downstream effectors) were analyzed by qPCR after 48h. In addition, protein expression of COL2 and TGF-β2 were evaluated. To further elucidate the involvement of the TGF-β2, we used siRNA and ALK5 inhibition. Hypoxic culture showed robust upregulation of hypoxic markers as well as upregulation of SOX9 and COL2 expression. Of all TGF-β isoforms, only TGF-β2 was upregulated under hypoxia on both gene and protein level. In addition, both type I receptors (ALK1 and ALK5) were upregulated under hypoxia, but type II and III receptors were not. TGF-β2 downregulation via siRNA abrogated the hypoxia-induced COL2 expression, as did ALK5 inhibition, giving a strong indication that this pathway is involved in chondrocyte redifferentiation under low oxygen tension. Hypoxic culture is a common approach for cartilage tissue engineering, but its underlying mechanisms are still poorly understood. Here, we show that increased TGF-β2 signaling through ALK5 plays a role in hypoxia-induced redifferentiation of chondrocytes.