Compositions and methods are provided for treatment of cartilage defects in animals and humans. The compositions of the invention include synovial tissue, synovial cells and matrices containing synovial (or cambium) tissue or cells for use in filling a cartilage defect. The matrix and synovial tissue or cell preparations may also contain a proliferation agent, transforming factor or other active agents to promote healing. A controlled-release delivery system may be used to administer the transforming factor. The compositions of the invention also include a synovial covering membrane or devitalized fascial sheet for covering the cartilage defect. The methods of this invention are those in which a minimally invasive surgical intervention is performed to remove a small portion of synovial membrane from a joint. Portions of the synovial membrane, or cells expanded in vitro, are implanted alone or within a matrix, into the defect site, where they produce new cartilage tissue and repair the defect. Alternatively, partially transformed synovial-derived tissue may be formed in situ and implanted into the defect site.