The temporomandibular joint is critical for jaw movements and allows for mastication, digestion of food, and speech. Temporomandibular joint osteoarthritis is a degenerative disease that is marked by permanent cartilage destruction and loss of extracellular matrix (ECM). To understand how the ECM regulates mandibular condylar chondrocyte (MCC) differentiation and function, we used a genetic mouse model of temporomandibular joint osteoarthritis that is deficient in two ECM proteins, biglycan and fibromodulin (Bgn(-/0)Fmod(-/-)). Given the unavailability of cell lines, we first isolated primary MCCs and found that they were phenotypically unique from hyaline articular chondrocytes isolated from the knee joint. Using Bgn(-/0) Fmod(-/-) MCCs, we discovered the early basis for temporomandibular joint osteoarthritis arises from abnormal and accelerated chondrogenesis. Transforming growth factor (TGF)-beta1 is a growth factor that is critical for chondrogenesis and binds to both biglycan and fibromodulin. Our studies revealed the sequestration of TGF-beta1 was decreased within the ECM of Bgn(-/0) Fmod(-/-) MCCs, leading to overactive TGF-beta1 signal transduction. Using an explant culture system, we found that overactive TGF-beta1 signals induced chondrogenesis and ECM turnover in this model. We demonstrated for the first time a comprehensive study revealing the importance of the ECM in maintaining the mandibular condylar cartilage integrity and identified biglycan and fibromodulin as novel key players in regulating chondrogenesis and ECM turnover during temoporomandibular joint osteoarthritis pathology.