Current treatment strategies for osteoarthritis (OA) predominantly address symptoms with limited disease-modifying potential. There is a growing interest in the use of adipose-derived stem cells (ADSCs) for OA treatment and developing biomimetic injectable hydrogels as cell delivery systems. Biomimetic injectable hydrogels can simulate the native tissue microenvironment by providing appropriate biological and chemical cues for tissue regeneration. A biomimetic injectable hydrogel using amnion membrane (AM) was developed which can self-assemble in situ and retain the stem cells at the target site. In the present study, we evaluated the efficacy of intraarticular injections of AM hydrogels with and without ADSCs in reducing inflammation and cartilage degeneration in a collagenase-induced OA rat model. A week after the induction of OA, rats were treated with control (phosphate-buffered saline), ADSCs, AM gel, and AM-ADSCs. Inflammation and cartilage regeneration was evaluated by joint swelling, analysis of serum by cytokine profiling and Raman spectroscopy, gross appearance, and histology. Both AM and ADSC possess antiinflammatory and chondroprotective properties to target the sites of inflammation in an osteoarthritic joint, thereby reducing the inflammation-mediated damage to the articular cartilage. The present study demonstrated the potential of AM hydrogel to foster cartilage tissue regeneration, a comparable regenerative effect of AM hydrogel and ADSCs, and the synergistic antiinflammatory and chondroprotective effects of AM and ADSC to regenerate cartilage tissue in a rat OA model.