Cartilage repair remains a major challenge in clinical trials. These current cartilage repair materials can not effectively promote chondrocyte generation, limiting their practical application in cartilage repair. In this work, we develop an implantable scaffold of RADA-16 peptide hydrogel incorporated with TGF-β1 to provide a microenvironment for stem cell-directed differentiation and chondrocyte adhesion growth. The longest release of growth factor TGF-β1 release can reach up to 600 h under physiological conditions. TGF-β1/RADA-16 hydrogel was demonstrated to be a lamellar porous structure. Based on the cell culture with hBMSCs, TGF-β1/RADA-16 hydrogel showed excellent ability to promote cell proliferation, directed differentiation into chondrocytes, and functional protein secretion. Within 14 days, 80% of hBMSCs were observed to be directed to differentiate into vigorous chondrocytes in the co-culture of TGF-β1/RADA-16 hydrogels with hBMSCs. Specifically, these newly generated chondrocytes can secrete and accumulate large amounts of collagen II within 28 days, which can effectively promote the formation of cartilage tissue. Finally, the exploration of RADA-16 hydrogel-based scaffolds incorporated with TGF-β1 bioactive species would further greatly promote the practical clinical trials of cartilage remediation, which might have excellent potential to promote cartilage regeneration in areas of cartilage damage.