Heparan sulfate is a component of the extracellular matrix (ECM) that modulates individual development and cell growth through its interaction with growth factors. Structurally, heparan sulfate consists of repeating linear sulfated poly-anionic disaccharide structures. The K5 polysaccharide has the same structure as heparosan, and is the capsular polysaccharide of Escherichia coli K5 strain which serves as a precursor in heparin and heparan sulfate biosynthesis. Here, we prepared sulfated K5 polysaccharides that are structurally similar to heparan sulfate and investigated their biocompatibility and bioactivity in stem cell chondrogenic differentiation. Briefly, sulfation groups were added to -NH- and/or -OH of a precursor heparosan and the modified heparosan was qualitatively analyzed by FT-IR, (1)H NMR, and (13)C NMR techniques. Cell viability was not significantly affected by the sulfated K5 capsular polysaccharide. Relative mRNA expression of the chondrogenic differentiation marker COL2A1 was significantly upregulated in cells treated with the N,O-sulfated K5 polysaccharide confirming that the sulfated K5 capsular polysaccharide is able to stimulate chondrogenic differentiation. The main sulfation pattern for chondrogenic activity is N,6-O sulfation and the activity was not proportional to the sulfation level. This type of mimic was prepared in nearly a gram scale, supporting further structural study and 3 dimension stem cell culture. Together, the results of this study show that sulfated K5 capsular polysaccharides are able to stimulate chondrogenic differentiation without affecting cell viability.