The aim of this study was to investigate the role of DNA methylation in the regulation of in vitro and in vivo cartilage formation. Based on the data of an RNA chip-assay performed on chondrifying BMP2-overexpressing C3H10T1/2 cells, the relative expression of Tet1 (tet methylcytosine dioxygenase 1), Dnmt3a (DNA methyltransferase 3) and Ogt (O-linked N-acetylglucosamine transferase) genes was examined with RT-qPCR in mouse cell-line based and primary micromass cultures. RNA probes for in situ hybridization were used on frozen sections of 15-day-old mouse embryos. DNA methylation was inhibited with 5-azacytidine during culturing. We found very strong but gradually decreasing expression of Tet1 throughout the entire course of in vitro cartilage differentiation along with strong signals in the cartilaginous embryonic skeleton. Dnmt3a and Ogt expressions did not show significant changes with RT-qPCR and gave weak in situ hybridization signals. Inhibition of DNA methylation applied during early stages of differentiation reduced cartilage-specific gene expression and cartilage formation. In contrast, it had stimulatory effect when added to differentiated chondrocytes. Our results indicate that the DNA demethylation-inducing Tet1 is a significant epigenetic factor of chondrogenesis, and inhibition of DNA methylation exerts distinct effects in different phases of in vitro cartilage formation.