Here we report the development and characterization of novel photo-crosslinkable chitosan-lactide (Ch-LA) hydrogels for bone tissue engineering. We synthesized the hydrogels based on Ch, LA, and methacrylic anhydride (MA), and examined their chemical structures, degradation rates, compressive moduli, and protein release kinetics. We also evaluated the cytotoxicity of the hydrogels and delivery efficacy of bone morphogenetic protein-2 (BMP-2) on osteoblast differentiation and mineralization using W-20-17 preosteoblast mouse bone marrow stromal cells and C2C12 mouse myoblast cells. NMR and FTIR revealed that the hydrogels were formed via amidation and esterification between Ch and LA, and methacrylation for photo-crosslinkable networks. Addition of a hydrophobic LA moiety to a hydrophilic Ch chain increased swellability, softness, and degradation rate of the photo-crosslinkable Ch-LA hydrogels. Changes in Ch/LA ratio and UV exposure time significantly affected compressive modulus and protein release kinetics. The photo-crosslinkable Ch-LA hydrogels were not cytotoxic regardless of the composition and UV crosslinking time. Higher alkaline phosphatase activities of both W-20-17 and C2C12 cells were observed in the less-crosslinked hydrogels at day 5. Mineralization was enhanced by sustained BMP-2 release from the hydrogels, but was cell type dependent. This photo-crosslinkable Ch-LA hydrogel is a promising carrier for growth factors.