Background: The successful surgical restoration of damaged meniscus has been a challenge, largely owing to a lack of characterization of meniscus cells and their precursors. Numerous strategies to repair or replace meniscus have achieved only limited success. Several recent studies have shown beneficial effect of mesenchymal stem cells in meniscus repair. The objective of our study was to characterize meniscus derived mesenchymal stem cells in terms of, colony formation, proliferation, multi potency and self-renewal capacity. Methods: Mesenchymal stem cells were isolated from menisci, patellar tendon and bone marrow of rabbits. The multi differentiating potential, colony, morphology and proliferation were studied in vitro. The expression of differential markers was studied by immunocytochemistry, qPCR and western blotting. Results: Three groups of cells appeared similar in colony formation and morphology. All of them were found to express high levels of stem cell markers including SSEA-4, Nanog and nucleostemin. High level of collagen II expression was detected in meniscus derived stem cells. Moreover, these cells appeared to have a pronounced tendency to chondrogenic differentiation under specialized culture conditions. Conclusions: Meniscus-derived mesenchymal stem cells (MMSCs) possessed all the necessary criteria of stem cells, including clonogenicity, self-renewal and multipotent differentiation capacity and possessed a tendency to differentiate into chondrocytes. Our results offer new insights into the biology of meniscus cells, and may assist in future strategies to treat damaged meniscus.