We have developed a new poly(vinyl alcohol) hydrogel (PVA-H) of increased physical strength through a new manufacturing process. Its mechanical properties have been found to be preferable as a substitute for articular cartilage. To evaluate its biocompatibility as an artificial articular cartilage, a series of in vivo tests within the intraarticular, as well as the intramuscular, environment were conducted. Tissue reactions of cartilage, bone, synovium, and muscle to PVA-H were studied histologically. In the experimental group, in which PVA-H was implanted, inflammatory reactions of all of these tissues were very slight. In the control group, in which ultra-high molecular weight polyethylene (UHMWPE) was implanted, although tissue reactions of bone and muscle were as slight as in the experimental group, those of cartilage and synovium were somewhat more conspicuous. By way of these findings, the better biocompatibility of PVA-H was documented.