Injectable hydrogels and microspheres derived from natural polysaccharides have been extensively investigated as drug delivery systems and cell scaffolds. In this study, we report a preparation of covalent hydrogels basing polysaccharides via the Schiff' base reaction. Water soluble carboxymethyl chitosan (CMC) and oxidized chondroitin sulfate (OCS) were prepared for cross-linking of hydrogels. The mechanism of cross-linking is attributed to the Schiff' base reaction between amino and aldehyde groups of polysaccharides. Furthermore, bovine serum albumin (BSA) loaded chitosan-based microspheres (CMs) with a diameter of 3.8-61.6μm were fabricated by an emulsion cross-linking method, followed by embedding into CMC-OCS hydrogels to produce a composite CMs/gel scaffold. In the current work, gelation rate, morphology, mechanical properties, swelling ratio, in vitro degradation and BSA release of the CMs/gel scaffolds were examined. The results show that mechanical and bioactive properties of gel scaffolds can be significantly improved by embedding CMs. The solid CMs can serve as a filler to toughen the soft CMC-OCS hydrogels. Compressive modulus of composite gel scaffolds containing 20mg/ml of microspheres was 13KPa, which was higher than the control hydrogel without CMs. Cumulative release of BSA during 2weeks from CMs embedded hydrogel was 30%, which was significantly lower than those of CMs and hydrogels. Moreover, the composite CMs/gel scaffolds exhibited lower swelling ratio and slower degradation rate than the control hydrogel without CMs. The potential of the composite hydrogel as an injectable scaffold was demonstrated by encapsulation of bovine articular chondrocytes in vitro. These results demonstrate the potential of CMs embedded CMC-OCS hydrogels as an injectable drug and cell delivery system in cartilage tissue engineering.