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Injectable hybrid hydrogels were produced by mixing crosslinked aldehyde hyaluronic acid with dexamethasone grafted water soluble chitosan, without the addition of a chemical crosslinking agent. The gelation is attributed to the Schiff-base reaction between amino and aldehyde groups of hydrogel precursors. In this article, the water soluble chitosan, N-succinyl-chitosan, grafted with dexamethasone via water soluble carbodiimide chemistry has been characterized. In vitro gelation time, morphologies, swelling, weight loss, and compressive modulus of hybrid hydrogels in phosphate buffered saline were studied. The dexamethasone grafted hydrogel showed a slightly lower gelation time, higher water uptake and faster weight loss compared to the hydrogel without dexamethasone. Human adipose-derived stem cells were encapsulated into the dexamethasone grafted hydrogel in vitro to assess the biological performance and applicability of the hydrogel as cell carrier. Results demonstrated that the dexamethasone grafted hydrogel resulted in enhanced cell adhesion and proliferation as compared to the hydrogel without dexamethasone. These characteristics provide a potential opportunity for the dexamethasone grafted hybrid hydrogel as an injectable scaffold in adipose tissue engineering applications. © 2012 Wiley Periodicals, Inc. J. Appl. Polym. Sci., 2013 [ABSTRACT FROM AUTHOR]