Background Cartilage repair has been a challenge in the field of orthopedics for decades, highlighting the great significance of investigating potential therapeutic drugs. In this study, we explored the effect of SHP2 inhibitor, SHP099, as a small molecule drug on cartilage repair.Methods Human synovial mesenchymal stem cells (SMSCs) were isolated and their three-way differentiation potential was examined. After treated with chondrogenic medium, the chondrogenic effect of SHP099 on SMSCs was examined by Western blot, qPCR, and immunofluorescence (IF). To explore chondrogenic effects of SHP099 in vivo, full-thickness cartilage defects with microfracture were constructed in the right femoral trochlear of New Zealand White rabbits. Intra-articular injection of SHP099 or normal saline were performed twice a week for 6 weeks. Cartilage repair were evaluated by hematoxylin and eosin (H&E) staining, Safranin O/Fast Green staining. Immunohistochemistry (IHC) for collagen II (COL2) was also conducted to verify the abandance of cartilage extracellular matrix after SHP099 treatment. The mechanism involving yes associated protein (YAP) and WNT signaling was investigated in vitro.Result The SMSCs isolated from human synovium represented optimal multi-differentiation potential. SHP099 increased chondrogenic markers (SOX9, COL2) expression and decreased hypertrophic markers (COL10, RUNX2) in SMSCs. The inhibition of YAP and WNT signaling was also observed. Moreover, compared with the normal saline group at 6 weeks, intra-articular injection of SHP099 resulted in better defect filling which formed more hyaline cartilage-like tissue with more glycosaminoglycan (GAG) and COL2.Conclusion SHP099 promotes the repair of rabbit full-thickness cartilage defect, representing a potential therapeutic drug for cartilage repair.