To understand the cellular and molecular events contributing to arthrofibrosis, we used an adenovirus to deliver and overexpress transforming growth factor-beta 1 (TGF-β1) cDNA (Ad.TGF-β1) in the knee joints of immunocompromised rats. Following delivery, animals were killed periodically, and joint tissues were examined macroscopically and histologically. PCR-array was used to assay alterations in expression patterns of extracellular matrix (ECM)-associated genes. By days 5 and 10, TGF-β1 induced an increase in knee diameter and complete encasement of joints in dense scar-like tissue, locking joints at 90° of flexion. Histologically, massive proliferation of synovial fibroblasts was seen, followed by their differentiation into myofibroblasts. The fibrotic tissue displaced the normal architecture of the joint capsule and fused with articular cartilage. RNA expression profiles showed high levels of transcription of numerous MMPs, matricellular and ECM proteins. By day 30, the phenotype of the fibrotic tissue had undergone chondrometaplasia, indicated by cellular morphology, matrix composition and >100-fold increases in expression of collagen type II and cartilage link protein. Pre-labeling of articular cells by injection with recombinant lentivirus containing eGFP cDNA showed fibrotic/cartilaginous tissues appeared to arise almost entirely from local proliferation and differentiation of resident fibroblasts. Altogether, these results indicate that TGF-β1 is a potent inducer of arthrofibrosis, and illustrate the proliferative potential and plasticity of articular fibroblasts. They suggest the mechanisms causing arthrofibrosis share many aspects with tumorigenesis.