Although mesenchymal stem cells (MSCs) transplantation is reportedly a promising strategy for repairing damaged articular cartilage, MSCs-based cartilage tissue engineering has numerous limitations, including poor implanted cell adhesion, phenotypic alteration of cells, regulation of mechanical properties, and engraftment rates after implantation. This study aimed to investigate the efficacy of transplantation of synovium-derived mesenchymal stem cells (SDSCs) encapsulated in a hyaluronic acid/collagen/fibrinogen (HA/COL/FG) composite gel by supplementing recombinant human transglutaminase 4 (rhTG-4) in treating osteochondral defects. RhTG-4 treatment induced the expression of integrin β1 and dynamic actin fiber, enhancing SDSCs adhesion to fibronectin. Supplementation of rhTG-4 significantly induced the proliferation of SDSCs encapsulated in the HA/COL/FG composite gel and increased the hardness of the extracellular matrix. Furthermore, supplementation of rhTG-4 significantly upregulated aggrecan and type II collagen mRNA. Pretreatment with integrin β1 siRNA markedly suppressed TG4-induced actin remodeling, activation mitogen-activated protein kinase (MAPK), and eventually the chondrogenesis-related genes. Moreover, transplantation of SDSCs encapsulated in HA/COL/FG/rhTG-4 composite gel in vivo yielded reconstructed tissue resembling native hyaline cartilage. These data suggest that rhTG-4 enhances cartilage regeneration of the SDSCs encapsulated in hydrogel in rabbits.