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One approach to functional tissue engineering of cartilage is to utilize bioreactors to provide environmental conditions that stimulate chondrogenesis in cells cultured on biomaterial scaffolds. We report the combined use of a three-dimensional in vitro model and a novel bioreactor with perfusion of culture medium and mechanical stimulation in long-term studies of cartilage development and function. To engineer cartilage, scaffolds made of a non-woven mesh of polyglycolic acid (PGA) were seeded with bovine calf articular chondrocytes, cultured for an initial 30-day period under free swelling conditions, and cultured for an additional 37 day period in one of the three groups: (1) free-swelling, (2) static compression (on 24 h/day, strain control, static offset 10%), and (3) dynamic compression (on 1 h/day; off 23 h/day; strain control, static offset 2%, dynamic strain amplitude 5%; frequency 0.3 Hz). Constructs were sampled at timed intervals and assessed with respect to structure, biochemical composition, and mechanical function. Mechanical simulation had little effect on the compositions, morphologies and on mechanical properties of construct interiors discs, but it resulted in distincly different properties of the peripheral rings and face sides. Contructs cultured with mechanical loading maintained their cylindrical shape with flat and parallel top and bottom surfaces, and retained larger amounts of GAG. The modular bioreactor system with medium perfusion and mechanical loading can be utilized to define the conditions of cultivation for functional tissue engineering of cartilage.