By its avascular nature and limited healing potential, articular cartilage (AC) defects are still challenging to cure, resulting in degenerative diseases such as osteoarthritis. Several clinical techniques aim to repair the AC; however, load-bearing and fully functional tissue recapitulation remain a significant hurdle. In the last few decades, tissue engineering has given hope for resolving the issues associated with the existing therapy methods. Essential innovations in 3D bioprinting technology have led to a greater focus on successfully implementing engineered tissue constructs. For cartilage regeneration, Mesenchymal stem cells (MSCs) are a potential cell source in a unique milieu known as the stem-cell niche, characterized by low oxygen levels. Cobalt is well known for its hypoxic effects in vitro by stabilizing hypoxia-inducible factor (HIF-1α), a central regulator of stem cell fate. The main aim of this study was to evaluate the impact of Cobalt nanowires (Co NWS) on the chondrogenic potential of human umbilical cord MSCs (UMSCs) encapsulated in the PEGDA/Alginate hydrogel. In the current study, cell proliferation, mechanical properties, and the expression of chondrogenic markers were analyzed. Co NWS supplementation into the PEGDA/Alginate hydrogel enhanced the cell proliferation and mechanical properties and showed the upregulation of chondrogenic markers such as SOX 9, COL2A1, and ACAN through the HIF-1α pathway. Together these findings are taken into consideration the potential of hypoxia mimicking hydrogels in the treatment of osteoarthritis.