Kartogenin molecule helps repair damaged cartilage and reverse debilitating conditions like arthritis.
Currently these is no cure for the condition, only anti-inflammatory painkillers to relieve symptoms, and in severe cases, costly joint replacements are advised.
Main symptoms of arthritis include pain, stiffness and restricted movement in the joints, and in the UK it affects more than nine million people alone, the journal Science reports.
Researchers at the Genomics Institute of the Novartis Research Foundation in San Diego and Scripps Research Institute in La Jolla, California, US, said: "This may ultimately lead to a stem-cell based therapy for osteoarthritis," according to the Daily Mail.
During the study, 22,000 drug-like molecules were tested using a robotic screen, applying each one to bone marrow stem cells. When kartogenin was administered to mice with osteoarthritis-like symptoms, it prompted stem cells to change into cartilage cells.
A patent has already been filed, however more work is needed to understand exactly how the molecule works. Judith Brodie, chief executive of Arthritis Care, said: "We are delighted with any potential breakthrough for people with arthritis."