Cartilage tissue engineering has been the focus of considerable research. However, the fate of transplanted donor cells rarely is explored directly. In the current study, the effect of preincubating perichondrial cells into a polylactic acid scaffold before implantation into an osteochondral defect was studied. The extracellular matrix produced during preincubation was characterized; the viability of the donor cells was assessed; and the retention of the donor cells in the repair tissue was determined using a gene marker on the Y chromosome, the gender-determining region Y gene. During in vitro incubation, the cells produced an extracellular matrix consisting of glycosaminoglycans, and Types I and II collagen, and the cell viability remained great. In vivo, preincubated constructs had significantly greater retention of donor cells in the host repair tissue in the short term when compared with nonincubated controls. This study shows the value of preincubating engineered constructs before implantation, and additionally validates the gender-determining region Y gene as an effective tool for assessing the fate of donor cells in cartilage tissue engineering.