OBJECTIVE In our previous work, we prepared a type of chitosan hydrogel with excellent biocompatibility. In this study, tissue-engineered cartilage constructed with this chitosan hydrogel and costal chondrocytes was used to repair the articular cartilage defects. METHODS Chitosan hydrogels were prepared with a crosslinker formed by combining 1,6-diisocyanatohexane and polyethylene glycol. Chitosan hydrogel scaffold was seeded with rabbit chondrocytes that had been cultured for one week in vitro to form the preliminary tissue-engineered cartilage. This preliminary tissue-engineered cartilage was then transplanted into the defective rabbit articular cartilage. There were three treatment groups: the experimental group received preliminary tissue-engineered cartilage; the blank group received pure chitosan hydrogels; and, the control group had received no implantation. The knee joints were harvested at predetermined time. The repaired cartilage was analyzed through gross morphology, histologically and immunohistochemically. The repairs were scored according to the international cartilage repair society (ICRS) standard. RESULTS The gross morphology results suggested that the defects were repaired completely in the experimental group after twelve weeks. The regenerated tissue connected closely with subchondral bone and the boundary with normal tissue was fuzzy. The cartilage lacuna in the regenerated tissue was similar to normal cartilage lacuna. The results of ICRS gross and histological grading showed that there were significant differences among the three groups (P<0.05). CONCLUSIONS Chondrocytes implanted in the scaffold can adhere, proliferate, and secrete extracellular matrix. The novel tissue-engineered cartilage constructed in our research can completely repair the structure of damaged articular cartilage.