Cartilage tissue engineering has attracted great attention in defect repair and regeneration. The utilization of bioactive scaffolds to effectively regulate the phenotype and proliferation of chondrocytes has become an elemental means for cartilage tissue regeneration. On account of the simultaneous requirement of mechanical and biological performances for tissue-engineered scaffolds, in this work we prepared a naturally derived hydrogel composed of a bioactive kartogenin (KGN)-linked chitosan (CS-KGN) and an aldehyde-modified oxidized alginate (OSA) via the highly efficient Schiff base reaction and multifarious physical interactions in mild conditions. On the basis of the rigid backbones and excellent biocompatibility of these two natural polysaccharides, the composite hydrogel demonstrated favorable morphology, easy injectability, good mechanical strength and tissue adhesiveness, low swelling ratio, long-term sustainable KGN release, and facilitated bone marrow mesenchymal stem cell activity, which could simultaneously provide the mechanical and biological supports to promote chondrogenic differentiation and repair the articular cartilage defects. Therefore, we believe this work can offer a designable consideration and potential alternative candidate for cartilage and other soft tissue implants.