Heterogeneity of mesenchymal stem cells (MSCs) influences the cell therapy outcome and the application in tissue engineering. Also, the application of subpopulations of MSCs in cartilage regeneration remains poorly characterized. CD146+ MSCs are identified as the natural ancestors of MSCs and the expression of CD146 are indicative of greater pluripotency and self-renewal potential. Here, we sorted a CD146+ subpopulation from adipose-derived mesenchymal stem cells (ADSCs) for cartilage regeneration. Methods: CD146+ ADSCs were sorted using magnetic activated cell sorting (MACS). Cell surface markers, viability, apoptosis and proliferation were evaluated in vitro. The molecular signatures were analyzed by mRNA and protein expression profiling. By intra-articular injections of cells in a rat osteochondral defect model, we assessed the role of the specific subpopulation in cartilage microenvironment. Finally, CD146+ ADSCs were combined with articular cartilage extracellular matrix (ACECM) scaffold for long term (3, 6 months) cartilage repair. Results: The enriched CD146+ ADSCs showed a high expression of stem cell and pericyte markers, good viability, and immune characteristics to avoid allogeneic rejection. Gene and protein expression profiles revealed that the CD146+ ADSCs had different cellular functions especially in regulation inflammation. In a rat model, CD146+ ADSCs showed a better inflammation-modulating property in the early stage of intra-articular injections. Importantly, CD146+ ADSCs exhibited good biocompatibility with the ACECM scaffold and the CD146+ cell-scaffold composites produced less subcutaneous inflammation. The combination of CD146+ ADSCs with ACECM scaffold can promote better cartilage regeneration in the long term. Conclusion: Our data elucidated the function of the CD146+ ADSC subpopulation, established their role in promoting cartilage repair, and highlighted the significance of cell subpopulations as a novel therapeutic for cartilage regeneration.