AIM: To verify the effect of polygonatum polysaccharide (PSP) combined with TGF-β3 in inducing the differentiation of rat tendon-derived stem cells (TDSCs) into chondrocytes by activating the TGF-β3/Smad2 pathway. METHODS: TDSCs were extracted from rat tail tendons using enzyme digestion, purified, passaged, and identified via flow cytometry. TDSCs were treated with different concentrations of PSP, and the optimal growth concentration was determined using the CCK-8 assay. TDSCs were divided into four groups: PSP, TGF-β3, PSP+TGF-β3, and Control for differentiation induction. Chondrogenic differentiation was evaluated using morphological observations, toluidine blue staining, immunofluorescence staining, and Western blot analysis to detect COLⅡ, SOX9, and AGG. Western blot was also used to measure the expression levels of Smad2 and p-Smad2 to evaluate the activation of the TGF-β3/Smad2 pathway after chondrogenic induction. RESULTS: Flow cytometry analysis showed that TDSCs highly expressed CD90 and CD29, while CD11b and CD45 expression was low. The CCK-8 assay indicated that 5 μmol/L PSP was the optimal intervention dose. Toluidine blue staining revealed that the blue staining area in the PSP, PSP+TGF-β3, and TGF-β3 groups was larger compared to the Control group. Immunofluorescence analysis demonstrated that COLⅡ expression was significantly increased in the PSP, TGF-β3, and PSP+TGF-β3 groups, with the highest expression in the PSP+TGF-β3 group (P<0.05). Western blot analysis showed that the levels of p-Smad2/Smad2, COLⅡ, SOX9, and AGG were elevated in the PSP, TGF-β3, and PSP+TGF-β3 groups, with the highest expression in the PSP+TGF-β3 group (P<0.05). Compared to the Control group, the TGF-β3 and PSP groups also showed significantly increased expression (P<0.05). CONCLUSION: PSP promotes the proliferation and chondrogenic differentiation of TDSCs, possibly by activating the TGF-β3/Smad2 pathway.