Natural cartilage tissue has a limited self-regenerative capacity; thus, strategies to replenish the lost cartilage are desired in reconstructive and plastic surgery. Tissue-engineered cartilage using biodegradable polymeric scaffolds is one such approach gaining wide attention. We have earlier demonstrated the biocompatible nature and ability of chitosan-gelatin hydrogel to maintain differentiated populations of respiratory epithelial cells. The aim of the present study was to evaluate its suitability as a substratum for inducing chondrocyte growth and differentiation. Electron microscopic (SEM) analysis of freeze-dried hydrogels showed a highly porous morphology with interconnections as seen in cross section. Chondrocytes were observed to attach and exhibited a differentiated phenotype with proper cell-cell contact on three-dimensional freeze-dried hydrogels. When cultured on two-dimensional hydrogel films they showed higher growth rates (4-6%) compared with a polystyrene (TCPS) control until 6 days (p > 0.05), which slowed down after 10 days. Immunofluorescent microscopic studies revealed that chondrocytes on hydrogel films exhibited comparable expression of beta1 integrin (CD29) to TCPS controls, indicating the ability of the hydrogel substrate to maintain normal expression of beta1 integrin. RT-PCR analysis of chondrocytes grown on hydrogel films showed that chondrocytes express the mRNA for extracellular matrix proteins such as collagen type IIalpha1 (COL IIalpha1), COL III, COL IXalpha3. Expression of COL I was less prominent than COL II as indication of differentiation. Expression of COL X could not be detected, suggesting an absence of chondrocyte hypertrophy. Chondrocytes also showed weak mRNA expression of aggrecan, a cartilage-specific proteoglycan. All of these results point out the ability of the chitosan-gelatin hydrogel to induce the expression of mRNAs for cartilage-specific extracellular matrix proteins by nasal septal chondrocytes. This hydrogel needs to be further evaluated for its ability to support chondrocyte-specific marker expression to explore the possibility of forming a tissue resembling natural cartilage in vitro.