Hydrogels, highly hydrated cross-linked polymer networks, have emerged as powerful synthetic analogs of extracellular matrices for basic cell studies as well as promising biomaterials for regenerative medicine applications. A critical advantage of these synthetic matrices over natural networks is that bioactive functionalities, such as cell adhesive sequences and growth factors, can be incorporated in precise densities while the substrate mechanical properties are independently controlled. We have engineered poly(ethylene glycol) [PEG]-maleimide hydrogels to incorporate VEGF as supportive matrices to improve pancreatic islet vascularization and engraftment. PEG-maleimide were functionalized with RGD peptide and VEGF and cross-linked into a hydrogel by addition of collagenase-degradable peptides. These hydrogels supported in vitro islet survival, insulin production, and intra-islet endothelial cell sprouting. Importantly, islets delivered within these functionalized hydrogels exhibited improved engraftment, vascularization and insulin production compared to islets delivered within other hydrogels and without a hydrogel carrier. In another application, we functionalized hydrogels with the integrin-specific, collagen-mimetic triple helical peptide GFOGER to promote osteogenic differentiation and bone repair. Human mesenchymal stem cells adhered well and maintained viability on both RGD and GFOGER hydrogels. However, osteogenic differentiation was higher on GFOGER-hydrogels compared to RGD-hydrogels. GFOGER-functionalized hydrogels significantly enhanced bone repair of critically-sized, segmental bone defects in murine radii compared to other carriers. These studies establish these biofunctional hydrogels as promising biomaterial carriers for cell delivery, engraftment and enhanced tissue repair.