We recently introduced a novel pluronic F127 and hyaluronic acid-based hydrogel (HG) designed to deliver a broad range of therapeutics. The reverse-thermal responsive HG exhibits physical properties that seem to be ideal for the local delivery of drug- and cell-based therapies to specific anatomic sites through percutaneous injection. However, questions related to the HG's safety and efficacy must first be addressed. To address these issues, we performed standard in vitro cytotoxicity and drug release tests and in vivo biocompatibility tests in a rat model. In addition, we determined whether the HG was an effective stem cell carrier in a rat cartilage defect model. We found that the HG showed viability and biocompatibility levels similar to those reported for F127 or hyaluronic acid alone. In vitro drug release studies with bupivacaine, a drug used clinically for local pain relief, revealed that after an initial burst bupivacaine was released continuously for 10 days. Stem cells loaded in the HG were retained in situ and stimulated cartilage regeneration in experimental defects. Taken as a whole, these findings support further efforts to develop the HG as a versatile system for the delivery of a wide range of therapeutic agents in humans. © 2013 Wiley Periodicals, Inc. J Biomed Mater Res Part B: Appl Biomater, 2013.