BackgroundMesenchymal stem cells (MSCs) are a promising cell source for cartilage regeneration. However, the function of MSC can vary according to cell culture conditions, donor age, and heterogeneity of the MSC population, resulting in unregulated MSC quality control. To overcome these limitations, we previously developed a fluorescent real-time thiol tracer (FreSHtracer) that monitors cellular levels of glutathione (GSH), which are known to be closely associated with stem cell function. In this study, we investigated whether using FreSHtracer could selectively separate high-functioning MSCs based on GSH levels and evaluated the chondrogenic potential of MSCs with high GSH levels to repair cartilage defects in vivo.MethodsFlow cytometry was conducted on FreSHtracer-loaded MSCs to select cells according to their GSH levels. To determine the function of FreSHtracer-isolated MSCs, mRNA expression, migration, and CFU assays were conducted. The MSCs underwent chondrogenic differentiation, followed by analysis of chondrogenic-related gene expression. For in vivo assessment, MSCs with different cellular GSH levels or cell culture densities were injected in a rabbit chondral defect model, followed by histological analysis of cartilage-regenerated defect sites.ResultsFreSHtracer successfully isolated MSCs according to GSH levels. MSCs with high cellular GSH levels showed enhanced MSC function, including stem cell marker mRNA expression, migration, CFU, and oxidant resistance. Regardless of the stem cell tissue source, FreSHtracer selectively isolated MSCs with high GSH levels and high functionality. The in vitro chondrogenic potential was the highest in pellets generated by MSCs with high GSH levels, with increased ECM formation and chondrogenic marker expression. Furthermore, the MSCs’ function was dependent on cell culture conditions, with relatively higher cell culture densities resulting in higher GSH levels. In vivo, improved cartilage repair was achieved by articular injection of MSCs with high levels of cellular GSH and MSCs cultured under high-density conditions, as confirmed by Collagen type 2 IHC, Safranin-O staining and O’Driscoll scores showing that more hyaline cartilage was formed on the defects.ConclusionFreSHtracer selectively isolates highly functional MSCs that have enhanced in vitro chondrogenesis and in vivo hyaline cartilage regeneration, which can ultimately overcome the current limitations of MSC therapy.Graphical AbstractSupplementary InformationThe online version contains supplementary material available at 10.1186/s40824-023-00398-3.