Different kinds of cell-based therapies and tissue engineering applications need in vitro cultured differentiated chondrocytes. However, articular chondrocytes are slowly dividing cells, which in culture tend to lose their cell type-specific phenotype and ability to produce structurally and functionally correct cartilage tissue. Here we show that Y-27632 treatment at hypoxia enhances efficiently chondrocyte-specific extracellular matrix production on chondrocytic cells. The effects of the long-term Y-27632 exposure to human chondrosarcoma 2/8 cell phenotype maintenance and extracellular matrix production were studied at normoxia and at 5% low oxygen atmosphere. The Y-27632 treatment at normoxia induced ACAN and COL2A1 gene up-regulation and minor increase of sulfated glycosaminoglycans (sGAGs), while type II collagen expression was not significantly up-regulated. The most efficient expression of ACAN and COL2A1 was achieved when the Y-27632 treatment was performed at hypoxia. The production of sGAGs increased by 65.8%, and the ELISA analysis revealed over 6 times up-regulation on type II collagen expression. The Y-27632 induced up-regulation of S100-A1 and S100-B proteins, and also affected the expression of several other S100 protein family members, such as S100-A4, S100-A6, S100-A13 and S100-A16. The up-regulation of S100-A1 and S100-B proteins is suggested to enhance the chondrocytic phenotype of the cells.