The current thesis describes the evaluation of a microsphere-based scaffold that may be used as an early intervention therapy for treating focal cartilage and bone-cartilage interface defects. This scaffold is comprised of extracellular matrix materials, which serve as ‘raw materials,’ encapsulated in a biodegradable polymer for differentiation of progenitor or resident cells into bone and cartilage. The work in the thesis initially evaluated the in vitro performance of raw material encapsulating microsphere-based scaffolds fabricated using a high molecular weight polymer as a first step to establish their clinical efficacy. Subsequently, concentrations of raw materials were increased in microsphere-based scaffolds to stimulate in vitro osteogenesis and chondrogenesis in stem cells. Lastly, a novel combination of raw materials, demineralized bone matrix (DBM) and decellularized cartilage (DCC), encapsulated in a continuously graded scaffold design was tested for in vivo regeneration potential in a rabbit model. Results from the body of in vitro studies suggested that raw material encapsulation in microsphere-based scaffolds can potentially facilitate neo-tissue synthesis. The encapsulated raw materials readily enhanced biochemical production, stimulated gene expression, and tissue synthesis. Additionally, biochemical and gene expression evidence highlighted the benefits of using gradient-based strategies for regenerating bone and cartilage. The in vivo study demonstrated the feasibility and applicability of DBM and DCC gradient microsphere-based scaffolds in the New Zealand White rabbit knee defect. The results of the study indicated toward some benefits of using DCC and DBM and emphasized on the need to further refine the technology. The important next steps would be to investigate polymer degradation rate and its effect on tissue regeneration, and further attune raw material concentrations to augment osteochondral regeneration. Ultimately, this thesis demonstrated the benefits of raw material encapsulation in microsphere-based scaffolds, in addition to opening new areas of investigation with regard to transitioning this technology for clinical use.