The invention is directed toward a cartilage repair assembly comprising a shaped structure of subchondral bone with an integral overlying cartilage cap which is treated to remove cellular debris and proteoglycans and milled cartilage in a bioabsorbable carrier. The shaped structure is dimensioned to fit in a drilled bore in a cartilage defect area so that said shaped bone and cartilage cap when centered in the bore does not engage the side wall of the bore in an interference fit and is surrounded by milled cartilage and carrier. A method for inserting the assembly into a cartilage defect area is disclosed.