Background: Our goal is to optimize stem cell-based tissue engineering strategies in the context of the intervertebral disc environment. We explored the benefits of co-culturing nucleus pulposus cells (NPC) and adult mesenchymal stem cells (MSC) using a novel spherical bilaminar pellet culture system where one cell type is enclosed in a sphere of the other cell type. Our 3D system provides a structure that exploits embryonic processes such as tissue induction and condensation. We observed a unique phenomenon: the budding of co-culture pellets and the formation of satellite pellets that separate from the main pellet. Methods: MSC and NPC co-culture pellets were formed with three different structural organizations. The first had random organization. The other two had bilaminar organization with either MSC inside and NPC outside or NPC inside and MSC outside. Results: By 14 days, all co-culture pellets exhibited budding and spontaneously generated satellite pellets. The satellite pellets were composed of both cell types and, surprisingly, all had the same bilaminar organization with MSC on the inside and NPC on the outside. This organization was independent of the structure of the main pellet that the satellites stemmed from. Conclusion: The main pellets generated satellite pellets that spontaneously organized into a bilaminar structure. This implies that structural organization occurs naturally in this cell culture system and may be inherently favorable for cell-based tissue engineering strategies. The occurrence of budding and the organization of satellite pellets may have important implications for the use of co-culture pellets in cell-based therapies for disc regeneration. Clinical Relevance: From a therapeutic point of view, the generation of satellite pellets may be a beneficial feature that would serve to spread donor cells throughout the host matrix and restore normal matrix composition in a sustainable way, ultimately renewing tissue function. © 2009 The Spine Arthroplasy Society.