This study aims to construct a composite system of the tri-block polyethylene glycol injectable hydrogel (3B-PEG IH) and neural epithelial growth factor-like protein 1 (Nell-1), and to analyze its therapeutic effect on temporomandibular joint osteoarthritis (TMJOA). Sol-gel transition temperature was measured via inverting test. The viscoelastic modulus curves was measured by rheometer. Degradation and controlled release profiles of 3B-PEG IH were drawn in vitro. In vivo gel retention and biocompatibility were completed subcutaneously on the back of rats. After primary chondrocytes were extracted and identified, the cell viability in 3B-PEG IH was measured. Evaluation of gene expression in hydrogel was performed by real-time polymerase chain reaction. TMJOA rabbits were established by intra-articular injection of type II collagenase. Six weeks after composite systems being injected, gross morphological score, micro-CT, histological staining and grading were evaluated. The rusults showed that different types of 3B-PEG IH all reached a stable gel state at 37 °C and could support the three-dimensional growth of chondrocytes, but poly(lactide-co-caprolactone)-block-poly(ethyleneglycol)-block-poly(lactide-co-caprolactone) (PLCL-PEG-PLCL) hydrogel had a wider gelation temperature range and better hydrolytic stability for about 4 weeks. Its controlled release curve is closest to the zero-order release kinetics. In vitro, PLCL-PEG-PLCL/Nell-1 could promote the chondrogenic expression and reduce the inflammatory expression. In vivo, TMJOA rabbits were mainly characterized by the disorder of cartilage structure and the destruction of subchondral bone. However, PLCL-PEG-PLCL/Nell-1 could reverse the destruction of the subchondral trabecula, restore the fibrous and proliferative layers of the surface, and reduce the irregular hyperplasia of fibrocartilage layer. In conclusion, by comparing the properties of different 3B-PEG IH, 20 wt% PLCL-PEG-PLCL hydrogel was selected as the most appropriate material. PLCL-PEG-PLCL/Nell-1 composite could reverse osteochondral damage caused by TMJOA, Nfatc1-Runx3 signaling pathway may play a role in it. This study may provide a novel, minimally-invasive therapeutic strategy for the clinical treatment of TMJOA.