In this in vitro study, we compared the potential of collagen and alginate gels as carriers for chondrocyte transplantation and we studied the influence of demineralized bone matrix (DBM) on chondrocytes in the gels. Chondrocytes were assessed for cell viability, phenotype (histology), proliferation rate and sulfate incorporation. Collagen gels showed a significant increase in cell numbers, but the chondrocytes dedifferentiated into fibroblast-like cells from day 6 onwards. In alginate gels, initial cell loss was found, but the cells maintained their typical chondrocyte phenotype. Although the total quantity of proteoglycans initially synthesized per cell in collagen gel was significantly higher, expressed per cell, the quantity in alginate gel eventually surpassed collagen. No effects of culturing chondrocytes in combination with DBM could be demonstrated on cell proliferation and sulfate incorporation. The collagen and alginate gels have different advantages as carriers for chondrocyte transplantation. The high proliferation rate of chondrocytes in collagen gel may be an advantage, but the preservation of the chondrocyte phenotype and the gradually increasing proteoglycan synthesis in alginate gel is a promising method for creating a hyaline cartilage implant in vitro.