BACKGROUND: Knee osteoarthritis (KOA) is a prevalent chronic joint disease caused by various factors. Mesenchymal stem cells (MSCs) therapy is an increasingly promising therapeutic option for osteoarthritis. However, the chronic inflammation of knee joint can severely impede the therapeutic effects of transplanted cells. Gelatin microspheres (GMs) are degradable biomaterial that have various porosities for cell adhesion and cell–cell interaction. Excellent elasticity and deformability of GMs make it an excellent injectable vehicle for cell delivery. METHODS: We created Wharton’s jelly derived mesenchymal stem cells (WJMSCs)-GMs complexes and assessed the effects of GMs on cell activity, proliferation and chondrogenesis. Then, WJMSCs loaded in GMs were transplanted in the joint of osteoarthritis mice. After four weeks, joint tissue was collected for histological analysis. Overexpressing-luciferase WJMSCs were performed to explore cell retention in mice. RESULTS: In vitro experiments demonstrated that WJMSCs loaded with GMs maintained cell viability and proliferative potential. Moreover, GMs enhanced the chondrogenesis differentiation of WJMSCs while alleviated cell hypertrophy. In KOA mice model, transplantation of WJMSCs-GMs complexes promoted cartilage regeneration and cartilage matrix formation, contributing to the treatment of KOA. Compared with other groups, in WJMSCs+GMs group, there were fewer cartilage defects and with a more integrated tibia structure. Tracking results of stable-overexpressing luciferase WJMSCs demonstrated that GMs significantly extended the retention time of WJMSCs in knee joint cavity. CONCLUSION Our results indicated that GMs facilitate WJMSCs mediated knee osteoarthritis healing in mice by promoting cartilage regeneration and prolonging cell retention. It might potentially provide an optimal strategy for the biomaterial-stem cell based therapy for knee osteoarthritis.