Scientists have programmed stem cells to grow new arthritis-fighting cartilage on a scaffold shaped like the ball of a hip joint.
Gene therapy was used to cause the cells to release anti-inflammatory molecules which fend off arthritis.
The technique may one day provide an alternative to hip replacement surgery, say the US researchers.
Patients could be receiving the living tissue replacement hip joints in as little as three years.
Professor Farshid Guilak, who led the Washington University team, said: " We've developed a way to resurface an arthritic joint using a patient's own stem cells to grow new cartilage, combined with gene therapy to release anti-inflammatory molecules to keep arthritis at bay.
"Our hope is to prevent, or at least delay, a standard metal and plastic prosthetic joint replacement."
Conventional prosthetic hip joints typically last for fewer than 20 years. A second operation to replace an artificial joint can destroy bone and risk infection.
For this reason, doctors are reluctant to carry out hip replacement surgery on patients younger than 50.
Dr Bradley Estes, vice-president of research and development at US biotech company Cytex Therapeutics Inc, which holds patents on the technology, said: "We envision in the future that this population of younger patients may be ideal candidates for this type of biological joint replacement."
The new technique involves building a 3D biodegradable synthetic scaffold moulded into the precise shape of an individual hip joint.
Cartilage made from the patient's own stem cells, taken from fat beneath the skin, resurfaces the hip joint with living tissue.
The cartilage is grown in a "weaving pattern" that makes the implant strong enough to withstand loads of up to 10 times a patient's body weight.
A gene is also inserted into the newly grown tissue and then activated with a drug to orchestrate the release of anti-inflammatory molecules.
"When there is inflammation, we can give a patient a simple drug, which activates the gene we've implanted, to lower inflammation in the joint," said Prof Guilak. "We can stop giving the drug at any time, which turns off the gene."
The scientists have tried out the technique on a simulated hip joint and are now testing the implants in laboratory animals.
Prof Guilak said he expected the first human trials to take place in three to five years.
The research is described in the journal Proceedings of the National Academy of Sciences.