Chondroitin sulfate (CS) is considered as a possible candidate for the treatment of joint defect. This study is to evaluate the efficacy of intra-articular injection of CS carried by hydrogel in the treatment of chondral defects in adult rabbit models. Inclusion of CS (0–50 μg/ml) in in vitro chondrocyte culture exerts a dose-dependent increase in cell proliferation. To select for optimal carrier for in vivo study, the release kinetic of CS embedded in five types of hydrogel was studied using fluorescence technique and their biocompatibilities in vivo were investigated by injecting the CS-hydrogel into rabbit knees. α-CD-EG 4400 hydrogel was chosen as the carrier based on progressively released CS from the hydrogel, with 80% released by in one week while the remaining 20% was retained for 30 days. In vivo studies showed high biocompatibility of CS-hydrogel. To evaluate the efficacy of CS in the treatment of cartilage injury, chondral defects were created in femoral medial condyle (punch diameter 2.7 mm) or trochlea (punch diameter 3.5 mm) of the rabbits without damaging subchondral bone. CS (100 mg/ml) in 0.5 ml α-CD-EG 4400 hydrogel was then injected into the knee joint. Hydrogel and saline served as controls. On day 50 the chondral defect in the saline group showed no signs of healing and defect treated with hydrogel alone was covered with a thin and slightly irregular layer of fibrous tissue. The CS-hydrogel group showed a thicker layer composed of both hyaline and fibrocartilage. The modulus of elasticity was the highest in the CS-hydrogel group and lowest in the group injected with saline only. Our results suggest that intra-articular delivery of CS by α-CD-EG 4400 improved the biomechanical and histological properties of the repaired cartilage. It may be an effective treatment for cartilage injury.