This study investigates the capacity of a composite scaffold composed of polyglycolic acid-hydroxyapatite (PGA-HA) and autologous mesenchymal stem cells (MSCs) to promote repair of osteochondral defects. MSCs from culture-expanded rabbits were seeded onto a PGA and HA scaffold. After a 72-hour co-culture period, the cell-adhered PGA and HA were joined together, forming an MSCs-PGA-HA composite. Full-thickness cartilage defects in the intercondylar fossa of the femur were then implanted with the MSC-PGA-HA composite, the PGA-HA scaffold only, or they were left empty (n=20). Animals were sacrificed 16 or 32 weeks after surgery and the gross appearance of the defects was evaluated. The specimens were examined histologically for morphologic features, and stained immunohistochemically for type 2 collagen. Specimens of the MSCs-PGA-HA composite implantation group demonstrated hyaline cartilage and a complete subchondral bone formation. At 16 weeks post-implantation, significant integration of the newly formed tissue with surrounding normal cartilage and subchondral bone was observed when compared to the two control groups. At 32 weeks, no sign of progressive degeneration of the newly formed tissue was found. A significant difference in histological grading score was found compared with the control groups. The novel MSCs-seeded, PGA-HA biphasic graft facilitated both articular cartilage and subchondral bone regeneration in an animal model and might serve as a new approach for clinical applications.