At present, cartilage repair does not offer ideal efficacy. Fortunately, recent studies have claimed that RADA-16 peptide is an attractive therapeutic strategy for repairing cartilage defects. Therefore, this study tried to explore the effect of RADA-16 loaded with transforming growth factor-beta (TGF-β) 1 on cartilage differentiation of bone marrow mesenchymal stem cells (BMSCs). First, the RADA-16 peptide was synthesized by solid phase peptide, and a well-defined hydrogel was formed by supramolecular peptide self-assembly. Then, TGF-β1 (loading concentration of 10 ng/mL) was loaded into RADA-16, with scanning electron microscopy to observe the morphology of the TGF-β1/RADA-16 hydrogel and detect its related properties. Next, BMSCs were isolated from bone marrow samples and identified. TGF-β1/RADA-16 was co-cultured with L929, BMSCs, and C28/I2 cells, respectively, and the survival and proliferation ability of the cells was determined by live/dead cell staining and MTT assay. Chondrogenic differentiation and sGAG production of BMSCs were determined by Alcian blue staining and Blyscan assay, the expression of cartilage-associated genes by qRT-PCR, and the levels of inflammatory factors by ELISA. As for mechanism investigation, the Smad and ERK/MAPK signaling pathways were detected by western blot. RADA-16 hydrogel exhibited a well-distributed and interconnected porous surface structure, with a loading rate of 91.9% for TGF-β1. The TGF-β1/RADA-16 hydrogel had good release and degradation properties, and had no negative effect on the survival and proliferation ability of BMSCs, L929, and C28/I2 cells. Importantly, TGF-β1/RADA-16 hydrogel significantly accelerated chondrogenic differentiation and sGAG generation in BMSCs, and decreased pro-inflammatory factor production. In addition, the hydrogel also significantly activated the Smad and ERK/MAPK pathways of BMSCs. RADA-16 loaded with TGF-β1 has good biological properties and can enhance the chondrogenic differentiation ability of BMSCs.