Thermosensitive hydrogels are attractive alternative scaffolding materials for minimally invasive surgery through a simple injection and in situ gelling. In this study, a novel poly(ester-amide) polymer, methoxy poly(ethylene glycol)-poly(pyrrolidone-co-lactide) (mPDLA, P3L7) diblock copolymer, was synthesized and characterized for cartilage tissue engineering. A series of amphiphilic diblock copolymers was synthesized by ring-opening polymerization of mPEG 550, D,L-lactide, and 2-pyrrolidone. By dynamic light scattering analysis and tube-flipped-upside-down method, viscoelastic properties of the mPDLA diblock copolymer solution exhibited sol-gel transition behavior as a function of temperature. An in vitro degradation assay showed that degradation acidity was effectively reduced by introducing the 2-pyrrolidone monomer into the polyester hydrogel. Besides, mPDLA exhibited great biocompatibility in vitro for cell encapsulation due to a high swelling ratio. Moreover, cell viability and biochemical analysis proved that the mPDLA hydrogel presented a great chondrogenic response. Taken together, these results demonstrate that mPDLA hydrogels are promising injectable scaffolds potentially applicable to cartilage tissue engineering.