Meniscal tears are the most common knee injuries caused by a rupture of one or more of the fibrocartilage strips in the knee, which causes pain in the joint. Partial or complete meniscal replacement with engineered materials has gained increasing attention. This study tries to characterize a bacterial cellulose (BC) for potential use in meniscal repair. The toxicity of BC was assayed by MTT after cells were cultured with BC extraction medium. Cell growth on BC sheets and in vitro differentiation of bone marrow stem cells (BMSCs) into meniscal fibrochondrocytes (MFCs) were analyzed by HE staining, quantitative RT-PCR, ICC, and scanning electron microscopy. The serum IL-6 and TNF-alpha levels were measured by ELISA, macrophage infiltration by CD68 IHC, and tissue repair by HE staining. When co-cultured with MFCs, BMSCs were induced to differentiate into MFCs. The extraction medium of BC sheets did not inhibit MFC growth. Implantation of MFC and BMSC-engineered BC sheets into rabbit buttock muscles did not elicit inflammatory reactions and supported injury recovery. The bacterial cellulose exhibited great potential to be engineered for meniscal repair due to its biocompatability, non-immunoactivity, and bioactivity to support BMSC and MFC growth and differentiation.