The depletion of articular cartilage in the afflicted joints is a primary clinical feature of osteoarthritis. This disorder has been linked to a disturbance in the metabolism of the extracellular matrix components of this tissue. The mechanisms involved in the regulation of sulfated proteoglycan metabolism in articular cartilage were therefore studied by measuring the biosynthesis and distribution of 35S labeled glycosaminoglycans in chondrocyte cultures derived from normal and osteoarthritic tissue. Incorporation experiments were carried out at pH 7.0 with [35S]Na2SO4 in the presence of fetal calf serum, human serum from normal or arthritic individuals, or a combination of these. In the presence of heat inactivated human sera, osteoarthritic chondrocytes incorporate about two times as much of the available sulfate into macromolecules as do normal chondrocytes. The deposition of newly synthesized sulfated macromolecules into the cell layer by these cells is lower, however, than that by normal cells. In cultures of normal human chondrocytes, noninactivated sera from individuals with osteoarthritis stimulate sulfated proteoglycan biosynthesis more than equal concentrations of normal sera. The fraction of the newly synthesized material deposited into the cell layer was found to decrease with increasing serum concentrations. In the absence of serum, a 5 to 10 fold increase in deposited sulfated macromolecules was found. The distribution within the cell layer between intra and extracellular sites also was monitored by serum factors. Heat inactivation of the human serum component of the medium resulted in a 50% decrease in intracellular retention. These data suggest that biosynthesis of sulfated proteoglycans and their retention in the matrix are modulated by cell and serum factors. Despite an increased uptake of radioactively labeled inorganic sulfate by osteoarthritic chondrocytes in cell culture, a lower rate of deposition into the cell layer resulted in less matrix formation. This may be representative of the process leading to cartilage degradation in degenerative joint disease in vivo.