We investigated the effects of different oxygen tension (21% and 2.5% O2) on the chondrogenesis of different cell systems cultured in pH-degradable PVA hydrogels, including human articular chondrocytes (hACs), human mesenchymal stem cells (hMSCs), and their cocultures with a hAC/hMSC ratio of 20/80. These hydrogels were prepared with vinyl ether acrylate-functionalized PVA (PVA-VEA) and thiolated PVA-VEA (PVA-VEA-SH) via Michael-type addition reaction. The rheology tests determined the gelation of the hydrogels was controlled within 2-7 min, dependent on the polymer concentrations. The different cell systems were cultured in the hydrogel scaffolds for 5 weeks, and the safranin O and GAG assay showed that hypoxia (2.5% O2) greatly promoted the cartilage matrix production with an order of hAC > hAC/hMSC > hMSC. The real time quantitative PCR (RT-PCR) revealed that the hMSC group exhibited the highest hypertrophic marker gene expression (COL10A1, ALPL, MMP13) as well as the dedifferentiated marker gene expression (COL1A1) under normoxia conditions (21% O2), while these expressions were greatly inhibited by coculturing with a 20% amount of hACs and significantly further repressed under hypoxia conditions, which was comparative to the sole hAC group. The enzyme-linked immunosorbent assay (ELISA) also showed that coculture of hMSC/hAC greatly reduced the catabolic gene expression of MMP1 and MMP3 compared with the hMSC group. It is obvious that the hypoxia conditions promoted the chondrogenesis of hMSC by adding a small amount of hACs, and also effectively inhibited their hypotrophy. We are convinced that coculture of hAC/hMSC using in situ forming hydrogel scaffolds is a promising approach to producing cell source for cartilage engineering without the huge needs of primary chondrocyte harvest and expansion.