Objective To prepare a novel hyaluronic acid methacrylate (HAMA) hydrogel microspheres loaded polyhedral oligomeric silsesquioxane-diclofenac sodium (POSS-DS) patricles, then investigate its physicochemical characteristics and in vitro and in vivo biological properties. Methods Using sulfhydryl POSS (POSS-SH) as a nano-construction platform, polyethylene glycol and DS were chemically linked through the “click chemistry” method to construct functional nanoparticle POSS-DS. The composition was analyzed by nuclear magnetic resonance spectroscopy and the morphology was characterized by transmission electron microscopy. In order to achieve drug sustained release, POSS-DS was encapsulated in HAMA, and hybrid hydrogel microspheres were prepared by microfluidic technology, namely HAMA@POSS-DS. The morphology of the hybrid hydrogel microspheres was characterized by optical microscope and scanning electron microscope. The in vitro degradation and drug release efficiency were observed. Cell counting kit 8 (CCK-8) and live/dead staining were used to detect the effect on chondrocyte proliferation. Moreover, a chondrocyte inflammation model was constructed and cultured with HAMA@POSS-DS. The relevant inflammatory indicators, including collagen type Ⅱ, aggrecan (AGG), matrix metalloproteinase 13 (MMP-13), recombinant A disintegrin and metalloproteinase with thrombospondin 5 (Adamts5), and recombinant tachykinin precursor 1 (TAC1) were detected by immunofluorescence staining and real-time fluorescence quantitative PCR, with normal cultured chondrocytes and the chondrocyte inflammation model without treatment as control group and blank group respectively to further evaluate their anti-inflammatory activity. Finally, by constructing a rat model of knee osteoarthritis, the effectiveness of HAMA@POSS-DS on osteoarthritis was evaluated by X-ray film and Micro-CT examination. Results The overall particle size of POSS-DS nanoparticles was uniform with a diameter of about 100 nm. HAMA@POSS-DS hydrogel microspheres were opaque spheres with a diameter of about 100 μm and a spherical porous structure. The degradation period was 9 weeks, during which the loaded POSS-DS nanoparticles were slowly released. CCK-8 and live/dead staining showed no obvious cytotoxicity at HAMA@POSS-DS, and POSS-DS released by HAMA@POSS-DS significantly promoted cell proliferation (P<0.05). In the chondrocyte anti-inflammatory experiment, the relative expression of collagen type Ⅱ mRNA in HAMA@POSS-DS group was significantly higher than that in control group and blank group (P<0.05). The relative expression level of AGG mRNA was significantly higher than that of blank group (P<0.05). The relative expressions of MMP-13, Adamts5, and TAC1 mRNA in HAMA@POSS-DS group were significantly lower than those in blank group (P<0.05). In vivo experiments showed that the joint space width decreased after operation in rats with osteoarthritis, but HAMA@POSS-DS delayed the process of joint space narrowing and significantly improved the periarticular osteophytosis (P<0.05). Conclusion HAMA@POSS-DS can effectively regulate the local inflammatory microenvironment and significantly promote chondrocyte proliferation, which is conducive to promoting cartilage regeneration and repair in osteoarthritis.