Biomaterial design is an important component towards tissue engineering applications. There are many parameters that may be adjusted including physical properties (i.e., degradation and mechanics) and chemical properties (e.g., adhesion and cellular interactions). These design components may dictate the success or failure of a tissue engineering approach. Our group is particularly interested in the use of swollen hydrogels as cell carriers. One material that is used to fabricate hydrogels is hyaluronic acid (HA), which is found in many tissues in the body. Here, we show the control over hydrogel degradation, both in the bulk and locally to cells to control both the distribution of extracellular matrix by cells and whether or not a cell spreads in the hydrogels. These signals are important in the final structure and mechanical properties of engineered tissues, and potentially the differentiation of encapsulated stem cells.