The objectives of this study were to compare the chondrogenic potential of cells derived from different layers of Mandibular condyle cartilage and to gain further understanding of the impact of chondrogenic cues when embedded into a novel hydrogel scaffold (PGH, a polymer blend of poly (ethylene glycol), gelatin, and heparin) compared to a gelatin hydrogel scaffold (GEL). Cartilage layer cells (CLCs) and fibroblastic superficial layer cells (SLCs) were harvested from the mandibular condyle of boer goats obtained from a local abattoir. After expansion, cells were seeded into PGH and GEL hydrogels and cultured in chondrogenic media for 3 weeks. Scaffolds were harvested at 0, 1, and 3 week(s) and processed for gross appearance, histochemical, biochemical, and mechanical assays. In terms of chondrogenesis, major differences were observed between scaffold materials, but not cell types. Glycosaminoglycan (GAG) staining showed GEL scaffolds deposited GAG during the 3 week period, which was also confirmed with the biochemical testing. Moreover, GEL scaffolds had significantly higher compressive modulus and peak stress than PGH scaffolds at all time points with the largest difference seen in week 3. It can be concluded that GEL outperformed PGH in chondrogenesis. It can also be concluded that materials play a more important role in the process of chondrogenesis than the tested cell populations. Fibroblastic SLCs were shown to have similar chondrogenic potential as CLCs cells, suggesting a rich pool of progenitor cells in the superficial fibroblastic layer capable of undergoing chondrogenesis given appropriate physical and chemical cues.