Directed specification and prospective isolation of chondrogenic paraxial mesoderm progeny from human pluripotent stem (PS) cells have not yet been achieved. Here we report the successful generation of KDR⁻PDGFRα⁺ progeny expressing paraxial mesoderm genes and the mesendoderm reporter MIXL1-GFP in a chemically defined medium containing the canonical WNT signaling activator, BMP-inhibitor and the Nodal/Activin/TGFβ signaling controller. Isolated (GFP⁺)KDR⁻PDGFRα⁺ mesoderm cells were sensitive to sequential addition of the three chondrogenic factors PDGF, TGFβ and BMP. Under these conditions, the cells showed robust chondrogenic activity in micromass culture and generated a hyaline-like translucent cartilage particle in serum-free medium. In contrast, both STRO1⁺ mesenchymal stem/stromal cells from adult human marrow and mesenchymal cells spontaneously arising from hPS cells showed a relatively weaker chondrogenic response in vitro and formed more of the fibrotic cartilage particles. Thus, hPS cell-derived KDR⁻PDGFRα⁺paraxial mesoderm-like cells have potential in engineered cartilage formation and cartilage repair.