Aims Extracellular matrix (ECM) and its architecture have a vital role in articular cartilage (AC) structure and function. We hypothesized that a multi-layered chitosan-gelatin (CG) scaffold that resembles ECM, as well as native collagen architecture of AC, will achieve superior chondrogenesis and AC regeneration. We also compared its in vitro and in vivo outcomes with randomly aligned CG scaffold. Methods Rabbit bone marrow mesenchymal stem cells (MSCs) were differentiated into the chondrogenic lineage on scaffolds. Quality of in vitro regenerated cartilage was assessed by cell viability, growth, matrix synthesis, and differentiation. Bilateral osteochondral defects were created in 15 four-month-old male New Zealand white rabbits and segregated into three treatment groups with five in each. The groups were: 1) untreated and allogeneic chondrocytes; 2) multi-layered scaffold with and without cells; and 3) randomly aligned scaffold with and without cells. After four months of follow-up, the outcome was assessed using histology and immunostaining. Results In vitro testing showed that the secreted ECM oriented itself along the fibre in multi-layered scaffolds. Both types of CG scaffolds supported cell viability, growth, and matrix synthesis. In vitro chondrogenesis on scaffold showed an around 400-fold increase in collagen type 2 (COL2A1) expression in both CG scaffolds, but the total glycosaminoglycan (GAG)/DNA deposition was 1.39-fold higher in the multi-layered scaffold than the randomly aligned scaffold. In vivo cartilage formation occurred in both multi-layered and randomly aligned scaffolds treated with and without cells, and was shown to be of hyaline phenotype on immunostaining. The defects treated with multi-layered + cells, however, showed significantly thicker cartilage formation than the randomly aligned scaffold. Conclusion We demonstrated that MSCs loaded CG scaffold with multi-layered zonal architecture promoted superior hyaline AC regeneration. Cite this article: Bone Joint Res 2020;9(9):601–612.