Cartilage tissue engineering holds great promise for efficient cartilage regeneration. However, early inflammatory reactions to seed cells and/or scaffolds impede this process. Consequently, managing inflammation is of paramount importance. Moreover, due to the body’s restricted chondrogenic capacity, inducing cartilage regeneration becomes imperative. Thus, a controlled platform is essential to establish an anti-inflammatory microenvironment before initiating the cartilage regeneration process. In this study, we utilized fifth-generation polyamidoamine dendrimers (G5) as a vehicle for drugs to create composite nanoparticles known as G5-Dic/Sr. These nanoparticles were generated by surface modification with diclofenac (Dic), known for its potent anti-inflammatory effects, and encapsulating strontium (Sr), which effectively induces chondrogenesis, within the core. Our findings indicated that the G5-Dic/Sr nanoparticle exhibited selective Dic release during the initial 9 days and gradual Sr release from days 3 to 15. Subsequently, these nanoparticles were incorporated into a gelatin methacryloyl (GelMA) hydrogel, resulting in GelMA@G5-Dic/Sr. In vitro assessments demonstrated GelMA@G5-Dic/Sr’s biocompatibility with bone marrow stem cells (BMSCs). The enclosed nanoparticles effectively mitigated inflammation in lipopolysaccharide-induced RAW264.7 macrophages and significantly augmented chondrogenesis in BMSCs cocultures. Implanting BMSCs-loaded GelMA@G5-Dic/Sr hydrogels in immunocompetent rabbits for 2 and 6 weeks revealed diminished inflammation and enhanced cartilage formation compared to GelMA, GelMA@G5, GelMA@G5-Dic, and GelMA@G5/Sr hydrogels. Collectively, this study introduces an innovative strategy to advance cartilage regeneration by temporally modulating inflammation and chondrogenesis in immunocompetent animals. Through the development of a platform addressing the temporal modulation of inflammation and the limited chondrogenic capacity, we offer valuable insights to the field of cartilage tissue engineering.