The invention is directed toward a cartilage repair assembly comprising a cylindrically shaped allograft structure of subchondral bone with an integral overlying smaller diameter cartilage cap which is treated to remove cellular debris and proteoglycans. The shaped structure is dimensioned to fit in a drilled bore in a cartilage defect area so that the subchondral bone of the structure engages the side wall of the bone portion of the drilled bore in an interference fit while the cartilage cap is spaced from cartilage portion of the side wall of the drilled bore forming a gap in which a milled cartilage and biocompatible carrier mixture is placed allowing cell transfer throughout the defect area. A method for inserting the shaped allograft structure into a cartilage defect area is also disclosed.