Currently, the main focus on tissue engineering strategies is to mimic the extracellular matrix of the related tissues. Many studies accomplished to build tissue scaffolds to act as the natural surroundings of the specific interest, which can be established to behave like either healthy or unhealthy tissues. The latter one of these conditions is a quite new approach and crucial for the design of three-dimensional in vitro disease models. This study investigates the potential of a composite scaffold consisting hydroxyapatite-integrated fluorenyl-9-methoxycarbonyl diphenylalanine hydrogels by focusing on the optimization of this hybrid scaffold for the development of an in vitro model of degenerative cartilage. Cell growth, chondrocyte proliferation, extracellular matrix production, hypertrophy marker monitoring, scaffold mechanical properties, and morphological analysis were evaluated. Fluorenyl-9-methoxycarbonyl diphenylalanine dipeptides were dissolved in null cell culture media and pH decreased sequentially to compel peptides to self-organize into fibrous hydrogel scaffolds. Nano-hydroxyapatite crystals were incorporated into fluorenyl-9-methoxycarbonyl diphenylalanine hydrogels during the gelation to investigate the effect on chondrocytes. It is observed that hydroxyapatite incorporation into peptide hydrogels significantly increased the alkaline phosphatase activity and assymetrical cell divisions, which is appraised as an outcome of chondrocyte hypertrophy. It is concluded that chondrocytes develop a hypertrophic potential when they are cultured in a media with nano-hydroxyapatites in a three-dimensional cell culture matrix mimicking the extracellular matrix conditions of degenerative cartilage.