Degeneration in the cartilage occurs in the joints when the articular cartilage begins to degrade. While this type of degeneration is often related to aging, a variety of other factors are effective as well such as obesity, lack of exercise, genetic predisposition, bone density, occupational injury, trauma and gender. The severe cases result in bones rubbing together and creating stiffness, pain, and impaired movement. According to the United Nations report, 130 million people will suffer from osteoarthritis worldwide by 2050, of whom 40 million will be severely disabled by the disease. Costs associated with this pathology include costs for adaptive aids and devices, medicines, surgery, and time off at work. While protective factors such as exercise, healthy diet, and occupational injuries can all be addressed, many risk factors such as gender, age, and genetics are not modifiable. The physical disability arising from pain and loss of functional capacity reduces quality of life and increases the risk of further morbidity. Although there is a wide range of devices and palliative medicines available that can relieve pain and improve quality of life, there is a need for novel and stiff biocompatible materials that can replace cartilage. Based on this requirement, the formulation of a stiff hydrogel functionalized with TGF-β3 encapsulated nanoparticles to serve as a cartilage implant with improved mechanical and biological properties is proposed. PLGA nanoparticles was fabricated using a microfluidic platform in a continues mode. Subsequent to the formation of the functionalized hydrogel, biocompatibility testing was applied in order to investigate the interaction between the hydrogel and the cells. Besides, in vivo experiments with an osteochondral defect model was utilized to gain more insight based on histological cartilage assessment to evaluate new cartilage formation and healing.