In this study, we developed a composite hydrogel based on Gellan gum containing Boswellia serrata extract (BSE). BSE was either incorporated directly or loaded into an MgAl-layered double hydroxide (LDH) clay to create a multifunctional cartilage substitute. This composite was designed to provide anti-inflammatory properties while enhancing chondrogenesis. Additionally, LDH was exploited to facilitate the loading of hydrophobic BSE components and to improve the hydrogel's mechanical properties. A calcination process was also adopted on LDH to increase BSE loading. Physicochemical and mechanical characterizations were performed by spectroscopic (XPS and FTIR), thermogravimetric, rheological, compression test, weight loss and morphological (SEM) investigations. RPLC-ESI-FTMS was employed to investigate the boswellic acids release in simulated synovial fluid. The composites were cytocompatible and capable of supporting the mesenchymal stem cells (hMSC) growth in a 3D-conformation. Loading BSE resulted in the modulation of the pro-inflammatory cascade by down-regulating COX2, PGE2 and IL1β. Chondrogenesis studies demonstrated an enhanced differentiation, leading to the up-regulation of COL 2 and ACAN. This effect was attributed to the efficacy of BSE in reducing the inflammation through PGE2 down-regulation and IL10 up-regulation. Proteomics studies confirmed gene expression findings by revealing an anti-inflammatory protein signature during chondrogenesis of the cells cultivated onto loaded specimens. Concluding, BSE-loaded composites hold promise as a tool for the in-situ modulation of the inflammatory cascade while preserving cartilage healing.