Engineering approaches that mimic the process of fetal development have the potential to regenerate the zonal organization of articular cartilage. The objective of this work was to investigate the effect of sequential addition of zone-specific growth factors BMP-7, IGF-1, and IHH to TGF-β1 supplemented chondrogenic medium on zonal differentiation of human mesenchymal stem cells (hMSCs) encapsulated in an articular cartilage-derived matrix. First, fetal or adult bovine articular cartilage was decellularized, digested, and methacrylate-functionalized to produce an injectable macromer (CarMa, f-CarMa for fetal, a-CarMa for adult) for encapsulation of hMSCs. Next, the optimum matrix source and initial cell density for chondrogenic differentiation of hMSCs to the superficial and calcified zone phenotypes were determined by encapsulation of the cells in CarMa hydrogel and incubation in chondrogenic medium/TGF-β1 supplemented with BMP-7 and IHH, respectively. Then, the encapsulated hMSCs were pre-exposed to BMP-7 supplemented chondrogenic medium/TGF-β1 and the effect of sequential addition of IGF-1 and IHH to the medium on the expression of zone-specific markers was investigated. According to the results, f-CarMa and high cell densities enhanced differentiation of the encapsulated hMSCs to the superficial zone phenotype whereas a-CarMa and low cell densities enhanced differentiation to the calcified zone. The addition of IGF-1 to the chondrogenic medium/TGF-β1 stimulated differentiation of the encapsulated hMSCs, pre-exposed, to BMP-7, to the middle zone phenotype. The addition of IHH to the chondrogenic medium/TGF-β1 stimulated maturation of the encapsulated hMSCs, pre-exposed to BMP-7 and IGF-1, to the calcified zone phenotype. The results are potentially useful for engineering injectable, cellular hydrogels for regeneration of full-thickness articular cartilage.