Osteoarthritis is characterized by enzymatic breakdown of the articular cartilage via the disruption of chondrocyte homeostasis, ultimately resulting in the destruction of the articular surface. Decades of research have highlighted the importance of inflammation in osteoarthritis progression, with inflammatory cytokines shifting resident chondrocytes into a pro-catabolic state. Inflammation can result in poor outcomes for cells implanted for cartilage regeneration. Therefore, a method to promote the growth of new cartilage and protect the implanted cells from the pro-inflammatory cytokines found in the joint space is required. In this study, we fabricate two gel types: polymer network hydrogels composed of chondroitin sulfate and hyaluronic acid, glycosaminoglycans (GAGs) known for their anti-inflammatory and prochondrogenic activity, and interpenetrating networks of GAGs and collagen I. Compared to a collagen-only hydrogel, which does not provide an anti-inflammatory stimulus, chondrocytes in GAG hydrogels result in reduced production of pro-inflammatory cytokines and enzymes as well as preservation of collagen II and aggrecan expression. Overall, GAG-based hydrogels have the potential to promote cartilage regeneration under pro-inflammatory conditions. Further, the data have implications for the use of GAGs to generally support tissue engineering in pro-inflammatory environments.