Cartilage tissue engineering, in which chondrogenic cells are combined with a scaffold, is a cell-based approach to regenerate damaged cartilage. Various scaffold materials have been investigated, amongst which are hydrogels. Previously, we have developed dextran-based hydrogels which form under physiological conditions via a Michael type addition reaction. Hydrogels can be formed in situ by mixing a thiol-functionalized dextran (Dex-SH) with a tetra-acrylated star poly(ethylene-glycol) (PEG-4-Acr) solution. In this manuscript we describe how the degradation time of Dex-PEG hydrogels can be varied from 3 to 7 weeks by changing the degree of substitution of thiol groups on dextran. The degradation times increased slightly after encapsulation of chondrocytes in the gels. The effect of the gelation reaction on cell viability and cartilage formation in the hydrogels was investigated. Chondrocytes or embryonic stem cells (ESCs) were mixed in the aqueous dextran solution and we confirmed that the cells survived gelation. After a 3 week culturing period, chondrocytes and ESC-derived embryoid bodies were still viable and both cell types produced cartilaginous tissue. Our data demonstrate the potential of dextran hydrogels for cartilage tissue engineering strategies.