The development of an engineered tissue requires a clear understanding of the interactions between the individual components. In this study, we investigated how the addition of hyaluronic acid (HA) to a cartilage tissue engineered scaffold alters chondrocytic expression, and specifically the expression of insulin-like growth factor-1 (IGF-1) signaling molecules. Bovine chondrocytes were embedded (7 million cells/mL) in 2.0% w/v alginate hydrogels containing varying HA concentrations (0, 0.05, 0.50, and 5.00 mg/mL). In vitro constructs were cultured with exogenous IGF-1, and gene expression was monitored at days 1, 4, and 8 for IGF-1, IGF-1 receptor (IGF-1R), IGF binding protein 3 (IGFBP-3), type II collagen and type I collagen. In vivo constructs were precultured for 24 h with exogenous IGF-1 before being implanted subcutaneously in severe combined immunodeficient mice; samples were analyzed using histology at days 7, 14, and 21. Results indicate that, with the addition of high levels (5.00 mg/mL) of HA, IGF-1 can become entrapped within the matrix and therefore interfere with the delivery of IGF-1 to chondrocytes. In vitro and in vivo data showed that increasing the concentration of HA in an alginate hydrogel can decrease chondrocyte IGF-1 expression. IGF-1R expression did not change with HA concentration, and the addition of any HA did not significantly alter IGFBP-3 expression. Chondrocytes continuously expressed phenotypic type II collagen in vitro and in vivo throughout the study for all the groups. However, for all the HA concentrations investigated, chondrocytes showed more of a fibroblastic phenotype, as indicated by greater expression of type I collagen than with no HA, in vitro and in vivo. In conclusion, these results indicate that HA interferes with the delivery of IGF-1 to chondrocytes, affecting the endogenous expression of IGF-1 signaling molecules and the resulting chondrocyte phenotype, and therefore demonstrating the critical effect of biomaterial scaffolds on encapsulated cell function.