Interleukin 1β (IL-1β) is upregulated following tendon injury. Here we demonstrate that in adult and fetal tenocytes IL-1β increases the expression of matrix metalloproteinases, tenascin-C and Sox9 and decreases the expression of scleraxis and cartilage oligomeric matrix protein. When cultured in 3-dimensional collagen gels adult and fetal tenocytes exposed to IL-1β have reduced contraction ability and generate tendon-like constructs with a lower storage modulus. In contrast, equine embryonic stem cell (ESC) derived tenocytes exposed to IL-1β exhibit no changes in gene expression and generate identical tendon-like constructs. We propose that ESC-derived tenocytes do not respond to IL-1β due to their low expression of interleukin 1 (IL-1) receptor 1 and high expression of the decoy receptor IL-1 receptor 2 and IL-1 receptor antagonist protein (IL1Ra). This may make ESC-derived tenocytes an advantageous source of cells for tissue regeneration and allow the development of novel pharmaceutical interventions to protect endogenous cells from inflammation.