Intra-articular (IA) injection is an attractive route of administration for the treatment of osteoarthritis (OA). However, free drugs injected into the joint space are rapidly cleared and many of them can induce adverse off-target effects on different IA tissues. To overcome these limitations, we designed nanocomposite 4-arm-poly­(ethylene glycol)-maleimide (PEG-4MAL) microgels, presenting cartilage- or synoviocyte-binding peptides, containing poly­(lactic-co-glycolic) acid (PLGA) nanoparticles (NPs) as an IA small molecule drug delivery system. Microgels containing rhodamine B (model drug)-loaded PLGA NPs were synthesized using microfluidics technology and exhibited a sustained, near zero-order release of the fluorophore over 16 days in vitro. PEG-4MAL microgels presenting synoviocyte- or cartilage-targeting peptides specifically bound to rabbit and human synoviocytes or to bovine articular cartilage in vitro, respectively. Finally, using a rat model of post-traumatic knee OA, PEG-4MAL microgels were shown to be retained in the joint space for at least 3 weeks without inducing any joint degenerative changes as measured by EPIC-μCT and histology. Additionally, all microgel formulations were found trapped in the synovial membrane and significantly increased the IA retention time of a model small molecule near-infrared (NIR) dye compared to that of the free dye. These results suggest that peptide-functionalized nanocomposite PEG-4MAL microgels represent a promising intra-articular vehicle for tissue-localized drug delivery and prolonged IA drug retention for the treatment of OA.