Objective To explore the effect of chitosan (CS) hydrogel loaded with tendon-derived stem cells (TDSCs; hereinafter referred to as TDSCs/CS hydrogel) on tendon-to-bone healing after rotator cuff repair in rabbits. Methods TDSCs were isolated from the rotator cuff tissue of 3 adult New Zealand white rabbits by Henderson step-by-step enzymatic digestion method and identified by multidirectional differentiation and flow cytometry. The 3rd generation TDSCs were encapsulated in CS to construct TDSCs/CS hydrogel. The cell counting kit 8 (CCK-8) assay was used to detect the proliferation of TDSCs in the hydrogel after 1-5 days of culture in vitro, and cell compatibility of TDSCs/CS hydrogel was evaluated by using TDSCs alone as control. Another 36 adult New Zealand white rabbits were randomly divided into 3 groups (n=12): rotator cuff repair group (control group), rotator cuff repair+CS hydrogel injection group (CS group), and rotator cuff repair+TDSCs/CS hydrogel injection group (TDSCs/CS group). After establishing the rotator cuff repair models, the corresponding hydrogel was injected into the tendon-to-bone interface in the CS group and TDSCs/CS group, and no other treatment was performed in the control group. The general condition of the animals was observed after operation. At 4 and 8 weeks, real-time quantitative PCR (qPCR) was used to detect the relative expressions of tendon forming related genes (tenomodulin, scleraxis), chondrogenesis related genes (aggrecan, sex determining region Y-related high mobility group-box gene 9), and osteogenesis related genes (alkaline phosphatase, Runt-related transcription factor 2) at the tendon-to-bone interface. At 8 weeks, HE and Masson staining were used to observe the histological changes, and the biomechanical test was used to evaluate the ultimate load and the failure site of the repaired rotator cuff to evaluate the tendon-to-bone healing and biomechanical properties. Results CCK-8 assay showed that the CS hydrogel could promote the proliferation of TDSCs (P<0.05). qPCR results showed that the expressions of tendon-to-bone interface related genes were significantly higher in the TDSCs/CS group than in the CS group and control group at 4 and 8 weeks after operation (P<0.05). Moreover, the expressions of tendon-to-bone interface related genes at 8 weeks after operation were significantly higher than those at 4 weeks after operation in the TDSCs/CS group (P<0.05). Histological staining showed the clear cartilage tissue and dense and orderly collagen formation at the tendon-to-bone interface in the TDSCs/CS group. The results of semi-quantitative analysis showed that compared with the control group, the number of cells, the proportion of collagen fiber orientation, and the histological score in the TDSCs/CS group increased, the vascularity decreased, showing significant differences (P<0.05); compared with the CS group, the proportion of collagen fiber orientation and the histological score in the TDSCs/CS group significantly increased (P<0.05), while there was no significant difference in the number of cells and vascularity (P>0.05). All samples in biomechanical testing failed at the repair site during the testing process. The ultimate load of the TDSCs/CS group was significantly higher than that of the control group (P<0.05), but there was no significant difference compared to the CS group (P>0.05). Conclusion TDSCs/CS hydrogel can induce cartilage regeneration to promote rotator cuff tendon-to-bone healing.