Chondral defects pose a great challenge for clinicians to manage owing to the limited capacity for self-healing. Various traditional approaches have been adopted for the repair of these defects with unsatisfactory results. Cartilage tissue engineering techniques have emerged as promising strategies to enhance regeneration and overcome these traditional shortcomings. The cell-homing based technique is considered the most promising owing to its unique advantages. Thermosensitive hydrogels have been applied as scaffolds for biomedical applications with smart sol-gel response for altering environmental temperature. Transforming growth factor (TGF)-β1 is considered to be capable of promoting chondrogenesis. In this study, a novel TGF-β1-loaded poly(ε-caprolactone)-poly(ethylene glycol)-poly(ε-caprolactone) (PCEC) hydrogel was fabricated using simple procedures. Hydrogel characterization, rheological testing, component analysis, and assessment of sol-gel transition, in vitro degradation, and TGF-β1 release confirmed that this material possesses a porous microstructure with favorable injectability and sustained drug release. Full-thickness cartilage defects were induced on rat knees for in vivo cartilage repair for eight weeks. Micro-CT and histological evaluation provided further evidence of the optimal capacity of this novel hydrogel for cartilage regeneration with respect to that of other methods. Moreover, our results demonstrated that the cell-free hydrogel is thermosensitive, injectable, biodegradable, and capable of in vivo cartilage repair and possesses high potential and benefits for acellular cartilage tissue engineering and clinical application in the future.