Cell-based tissue engineering is a promising approach for treating cartilage lesions but the optimal cell-scaffold combination for hyaline cartilage regeneration has yet to be identified. Novel hydrogels allow including tailored tissue type specific modifications with physiologically relevant peptides, by this selectively influencing the cell response. Aim of this study was to modify a poly(ethylene glycol) (PEG)/heparin hydrogel by functionalization with cell instructive peptides introducing matrix-metalloprotease (MMP)-degradability, the cell adhesion motif RGD, or collagen binding motifs (CKLER, CWYRGRL) to improve cartilage matrix deposition in tissue engineering constructs. The hydrogels were formed by mixing thiol-endfunctionalized (MMP-insensitive) starPEG or starPEG-MMP-conjugates carrying MMP-sensitive peptides at every arm and maleimide-functionalized heparin [1] in the presence or absence of cell instructive peptides. Human mesenchymal stromal cells (MSC) or porcine chondrocytes were grown in the hydrogels for up to 4 weeks in vitro under chondrogenic conditions, and in vivo in subcutaneous pockets of immunodeficient mice. MMP-sensitive and –insensitive starPEG/heparin hydrogels supported chondrogenic differentiation of MSC according to induction of COL2A1, BGN and ACAN mRNA expression. Enhanced MMP-sensitivity and therefore degradability increased cell viability and proliferation. RGD-modification of the hydrogels induced cell-spreading and an intensively interconnected cell network. Other than hypothesized, CKLER and CWYRGRL were unable to raise collagen deposition in constructs Peptide-functionalized starPEG/heparin hydrogel altered cell morphology, proliferation and differentiation with MSC being similar sensitive to cell-matrix interaction peptides like articular chondrocytes. We also demonstrated that