Multiple epiphyseal dysplasia (MED), caused by mutations in MATN3, is a chondrodysplasia affecting the cartilage growth plate and is characterised by delayed epiphyseal ossification, short stature, and early onset osteoarthritis. Here we generated an in vitro human pluripotent stem cell (hPSC) model of cartilage growth-plate development to identify pathogenic mechanisms underlying MED. hPSCs were differentiated to chondrocytes via a mesenchymal intermediate, followed by TGF{beta}3+BMP2 induced chondrogenic pellet culture. MATN3-mutant hPSCs were generated by reprogramming MED patient PBMCs or by CRISPR-Cas9 gene editing to introduce a MATN3 mutation in a hESC line. RNAseq was used to assess chondrogenesis and identify MED pathogenic mechanisms. Transmission electron microscopy (TEM) was used to assess extracellular matrix assembly. The resultant hPSC-derived cartilage pellets displayed a typical cartilage morphology and strongly expressed cartilage matrix markers, e.g., collagen II and matrilin-3. Matrilin-3 protein was detected within both the matrix and cells of heterozygous mutant hPSC-cartilage pellets. RNAseq of mutant hPSC-cartilage pellets revealed significant enrichment for ECM organisation and cholesterol biosynthesis pathway genes as well as sightly increased expression of some unfolded protein response (UPR) marker genes. MATN3 mutant hPSC-derived cartilage pellets displayed abnormal matrix assembly, distended ER, accumulation of lipid droplets, and increased cholesterol content. Our model revealed mutant matrilin-3 induces cholesterol biosynthesis pathway upregulation and abnormal matrix assembly during MED pathogenesis. This study provides new insights into the molecular mechanisms underlying MED and highlights potential therapeutic targets.