Recently, injectable hydrogel/microparticle systems have so considered for tissue engineering and regenerative medicine. In this study, we produced an injectable in situ self-crosslinked hydrogel/microparticle system for simultaneous dual drug delivery. First, melatonin conjugated chitosan microparticle loaded with methylprednisolone (MCC-MP) microparticle was fabricated by the covalent linkage of melatonin to chitosan by N-hydroxysuccinimide (NHS)1-Ethyl-3-(3-dimethylamino propyl)-carbodiimide (EDC) followed by an ionic gelation of MCC and MP using tripolyphosphate (TPP). Second, the hydrogel was prepared by the connection between the aldehyde group of alginate oxide (AD) and the amine group belonging to carboxymethyl chitosan (CMC) via Schiff base reaction. Finally, microparticle was incorporated into the AD-CMC hydrogel to produce a hydrogel/microparticle system. Hydrogel/microparticle was assessed by many techniques including microscopy, spectroscopy, particle size measurements, mechanical analysis, injectability, rheological analyses to ascertain hydrogel/microparticle properties. The biological assays of mesenchymal stem cells (MSCs) culture, 3-(4,5-Dimethylthiazol-2-yl)-2, 5-diphenyltetrazolium bromide (MTT), acridine orange/propidium iodide (AO/PI), and 4, 6-diamidino-2-phenylindole (DAPI) to assess cell viability and dimethylmethylene blue (DMMB) to evaluate proteoglycan content were done. The release profiles of melatonin and MP showed acceptable release after 60 and 20 days, respectively. The hydrogel/microparticle system has the ability to sustain cells alive. A higher rate of proteoglycan content was observed in hydrogel/microparticle as compared with hydrogel. With appropriate biocompatibility and adequate properties, this system can be a proper alternative for cartilage tissue engineering. © 2018 Wiley Periodicals, Inc. J Biomed Mater Res Part A: 106A: 1932-1940, 2018.