Background: Microfracture augmentation can be a cost-effective single-step alternative to current cartilage repair techniques. Trypsin pretreatment combined with a growth factor–functionalized self-assembling KLD hydrogel (“functionalized hydrogel”) has been shown to improve overall cartilage repair and integration to surrounding tissue in small animal models of osteochondral defects. Hypothesis: Microfracture combined with trypsin treatment and a functionalized hydrogel will improve reparative tissue quality and integration as compared with microfracture alone in an equine model. Study Design: Controlled laboratory study. Methods: Bilateral cartilage defects (15-mm diameter) were created on the medial trochlear ridge of the femoropatellar joints in 8 adult horses (16 defects total). One defect was randomly selected to receive the treatment, and the contralateral defect served as the control (microfracture only). Treatment consisted of 2-minute trypsin pretreatment of the surrounding cartilage, subchondral bone microfracture, and functionalized hydrogel premixed with growth factors (platelet-derived growth factor and heparin-binding insulin-like growth factor 1). After surgery, all horses were subjected to standardized controlled exercise on a high-speed treadmill. Clinical evaluation was conducted monthly, and radiographic examinations were performed at 2, 16, 24, 32, 40, and 52 weeks after defect creation. After 12 months, all animals were euthanized. Magnetic resonance imaging, arthroscopy, gross pathologic evaluation of the joint, histology, immunohistochemistry, and biomechanical analyses were performed. Generalized linear mixed models (with horse as random effect) were utilized to assess outcome parameters. When P values were <.05, pairwise comparisons were made using least squares means. Results: Improved functional outcome parameters were observed for the treatment group, even though mildly increased joint effusion and subchondral bone sclerosis were noted on imaging. Microscopically, treatment resulted in improvement of several histologic parameters and overall quality of repaired tissue. Proteoglycan content based on safranin O–fast green staining was also significantly higher in the treated defects. Conclusion: Trypsin treatment combined with functionalized hydrogel resulted in improved microfracture augmentation. Clinical Relevance: Therapeutic strategies for microfracture augmentation, such as those presented in this study, can be cost-effective ways to improve cartilage healing outcomes, especially in more active patients.