Osteoarthritis (OA) is a prevalent degenerative joint disease characterized by the progressive breakdown of cartilage, which lacks the capacity for self-repair. However, the negatively charged nature and compactness of the extracellular matrix present obstacles for drugs administered via intra-articular injection to effectively permeate the cartilage matrix and reach the intended target sites. Despite advancements in drug delivery systems, achieving prolonged drug retention and efficient penetration into cartilage tissue remains a significant challenge. In response, this study presents a novel dual physiological signal-responsive KPP@PLEL nanohydrogel system designed to enhance cartilage repair by targeting bone marrow mesenchymal stem cells (BMSCs) and overcoming cartilage permeability barriers. The KPP@PLEL system uniquely combines a polyamidoamine (PAMAM) dendrimer modified with MMP-13 responsive peptides and kartogenin (KGN), which is encapsulated within a thermosensitive hydrogel, PLEL. This approach overcomes the limitations of previous delivery systems by leveraging both body temperature sensitivity and MMP-13 enzyme responsiveness, which are specifically upregulated in OA-affected tissues. This dual-response mechanism enables the sustained release and enhanced delivery of KGN to the deep cartilage matrix while maintaining extended retention in the joint cavity. In vitro and in vivo studies demonstrated that the KPP@PLEL system has excellent biocompatibility, effectively reduces inflammation, and promotes the differentiation of BMSCs into chondrocytes. Additionally, the system showed superior cartilage penetration and extended retention time compared with those of free KGN or the hydrogel alone. In vivo, significant improvements in cartilage regeneration and substantial reductions in osteoarthritis progression were observed following intra-articular administration. This research offers a promising dual-response nanohydrogel platform that addresses key challenges in osteoarthritis treatment by combining efficient drug delivery, prolonged retention, and potent regenerative effects.