Matrix-assisted chondrocyte transplantation (MACT) is of great interest for the treatment of patients with cartilage lesions. However, the roles of the matrix properties in modulating cartilage tissue integration during MACT recovery have not been fully understood. The objective of this study was to uncover the effects of substrate mechanics on the integration of implanted chondrocyte-laden hydrogels with native cartilage tissues. To this end, agarose hydrogels with Young’s moduli ranging from 0.49 kPa (0.5%, w/v) to 23.08 kPa (10%) were prepared and incorporated into an in vitro human cartilage explant model. The hydrogel-cartilage composites were cultivated for up to 12 weeks and harvested for evaluation via scanning electron microscopy, histology, and a push-through test. Our results demonstrated that integration strength at the hydrogel-cartilage interface in the 1.0% (0.93 kPa) and 2.5% (3.30 kPa) agarose groups significantly increased over time, whereas hydrogels with higher stiffness (>8.78 kPa) led to poor integration with articular cartilage. Extensive sprouting of extracellular matrix in the interfacial regions was only observed in the 0.5% to 2.5% agarose groups. Collectively, our findings suggest that while neocartilage development and its integration with native cartilage are modulated by substrate elasticity, an optimal Young’s modulus (3.30 kPa) possessed by agarose hydrogels is identified such that superior quality of tissue integration is achieved without compromising tissue properties of implanted constructs.