Hydrogels due to their hydrophilicity and high water content, coupled with minimally invasive arthroscopic techniques are an attractive cell carrier for treating irregularly shaped defects with minimum tissue dissection and retraction. After injection and hardening in-situ, these three dimensional matrices guide the organization, differentiation, proliferation, and development of seeded cells into the desired tissue. Although preliminary results are promising for naturally derived hydrogels, their low mechanical properties, their pathogenicity, and their limited availability has prompted researchers to investigate the use of synthetic biodegradable and injectable hydrogels. An ideal hydrogel as a cell carrier should have controlled swelling ratio, mesh size and crosslink density, and degradation characteristics. In this work, we present gelation kinetics, degradation, and marrow stromal cells function on photo-ccrosslinked terpolymer hydrogels composed of short lactide-co-glycolide and ethylene oxide chains linked by unsaturated fumarate units. The in situ polymerizing mixture consisted of PLGEOF macromers, N-vinyl-2-pyrrolidone (NVP) as crosslinker, and 4-(2-hydroxyethoxy)phenyl-(2-hydroxy-2-propyl)ketone as UV initiator. Oscillatory shear rheometry at small strains was used to investigate the effects of composition (concentration of macromer, crosslinker, and initiator) as well as the time and intensity of UV light on the shear storage modulus of the in situ crosslinked hydrogels. The crosslinked samples were consequently used for the weight swelling and sol fraction measurements. The results showed that lowering the concentration of photo-initiator reduced the crosslink density of the gels while increasing their swelling ratio and sol fraction. Similar effect was observed by lowering the intensity of UV light. The final shear modulus of hydrogels was directly related to the duration of UV exposure. Hydrogels which were exposed to UV for longer time also showed lower swelling ratio and sol fraction. Increasing the concentration of PLEOF macromers led to an increase in shear modulus and the amount of swollen water in the hydrogels. Increasing the content of hydrophobic components in macromers significantly decreased the shear stiffness as well as the swelling ratio and substantially increased the amount of sol fraction. The crosslinking was facilitated at low NVP concentration, but hindered at higher NVP concentrations. This behavior was attributed to the change in crosslink structure of the hydrogels upon increasing the amount of crosslinker. The water content, mesh size, and degradation characteristics of these novel terpolymers can be controlled independently by the molecular weight of PEG, the weight ratio of PLA to PEG, and the ratio of lactide to glycolide, respectively. For example, the weight swelling ratio in water ranged from 0.1 to 6 for PLA:PEG ratios of 0.1 to 0.9, respectively. When the PLA content was increased from 10 to 20, 30, 40, 50, 60, 70, 80, and 90%, The weight loss after 21 days changed from 17 to 24, 58, 85, 53, 32, 31, 15, and 10%, respectively. The function of BMS cells encapsulated in these hydrogeels will be discussed.