Insulin-transferrin-selenium (ITS) was investigated as a complete or partial replacement for fetal bovine serum (FBS) during in vitro culture of bovine calf chondrocytes in hydrogel scaffolds. Chondrocyte-seeded agarose and self-assembling peptide hydrogels were maintained in Dulbecco's modified Eagle's medium plus 10% FBS, 1% ITS plus 0.2% FBS, or 1% ITS and evaluated for biosynthesis, cell division, and surface outgrowth of fibroblastic-like cells and fibrous capsule formation over several weeks of culture. In peptide hydrogels, cells cultured in ITS plus 0.2% FBS medium exhibited high rates of biosynthesis and showed similar cell division trends as seen in 10% FBS cultures. ITS medium alone did not support glycosaminoglycan accumulation beyond 5 days of culture, and cell division was less than that in both serum-containing cultures. Extensive cellular outgrowth and fibrous capsule formation were observed in 10% FBS medium, whereas little outgrowth was observed in ITS plus 0.2% FBS and none was seen in ITS medium alone. In agarose hydrogels, chondrocyte biosynthesis and cell division in ITS medium were similar to that in 10% serum culture over 5 weeks, and cellular outgrowth was eliminated. Taken together, ITS was suitable as a partial (peptide) or complete (agarose) substitute for serum, and also provided the benefit of reducing or eliminating cell outgrowth and fibrous capsule formation on the hydrogel surface.