The invention is directed toward a cartilage repair assembly comprising a shaped allograft structure of subchondral bone with an integral overlying cartilage cap which is treated to remove cellular debris and proteoglycans and milled allograft cartilage in a bioabsorbable carrier. The shaped structure is dimensioned to fit in a drilled bore in a cartilage defect area so that either the shaped bone or the cartilage cap engage the side wall of the drilled bore in an interference fit and is in contact with a milled cartilage and biocompatible carrier mixture allowing cell transfer throughout the defect area. A method for inserting the shaped allograft structure into a cartilage defect area is also disclosed.