In this study, thermoresponsive copolymers that are fully injectable, biocompatible, and biodegradable and are synthesized via graft copolymerization of poly(N-isopropylacrylamide) onto alginate using a free-radical reaction are presented. This new synthesis method does not involve multisteps or associated toxicity issues, and has the potential to reduce scale-up difficulties. Chemical and physical analyses verify the resultant graft copolymer structure. The lower critical solution temperature, which is a characteristic of sol-gel transition, is observed at 32 °C. The degradation properties indicate suitable degradation kinetics for drug delivery and bone tissue engineering applications. The synthesized P(Alg-g-NIPAAm) hydrogel is noncytotoxic with both human osteosarcoma (MG63) cells and porcine bone marrow derived mesenchymal stem cells (pBMSCs). pBMSCs encapsulated in the P(Alg-g-NIPAAm) hydrogel remain viable, show uniform distribution within the injected hydrogel, and undergo osteogenic and chondrogenic differentiation under appropriate culture conditions. Furthermore, for the first time, this work will explore the influence of alginate viscosity on the viscoelastic properties of the resulting copolymer hydrogels, which influences the rate of medical device formation and subsequent drug release. Together the results of this study indicate that the newly synthesized P(Alg-g-NIPAAm) hydrogel has potential to serve as a versatile and improved injectable platform for drug delivery and bone tissue engineering applications.