Balancing enhancement of neurite extension against loss of matrix support in synthetic hydrogels containing proteolytically degradable and bioactive signaling peptides to optimize tissue formation is difficult. Using a systematic approach, polyethylene glycol hydrogels containing concurrent continuous concentration gradients of the laminin derived bioactive signaling peptide, Ile-Lys-Val-Ala-Val (IKVAV), and collagen derived matrix metalloprotease degradable peptide, GPQGIWGQ, were fabricated and characterized. During proteolytic degradation of the concentration gradient hydrogels, the IKVAV and IWGQ cleavage fragment from GPQGIWGQ were found to interact and stabilize the bulk Young’s Modulus of the hydrogel. Further testing of discrete samples containing GPQGIWGQ or its cleavage fragments, GPQG and IWGQ, indicates hydrophobic interactions between the peptides are not necessary for mechanical stabilization of the hydrogel, but changes in the concentration ratio between the peptides tethered in the hydrogel and salts and ions in the swelling solution can affect the stabilization. Encapsulation of human induced pluripotent stem cell derived neural stem cells did not reduce the mechanical properties of the hydrogel over a 14 day neural differentiation culture period, and IKVAV was found to maintain concentration dependent effects on neurite extension and mRNA gene expression of neural cytoskeletal markers, similar to previous studies. As a result, this work has significant implications for the analysis of biological studies in matrices, as the material and mechanical properties of the hydrogel may be unexpectedly temporally changing during culture due to interactions between peptide signaling elements, underscoring the need for greater matrix characterization during the degradation and cell culture. Statement of significanceGreater emulation of the native extracellular matrix is necessary for tissue formation. To achieve this, matrices are becoming more complex, often including multiple bioactive signaling elements. However, peptide signaling in polyethylene glycol matrices and amino acids interactions between peptides can affect hydrogel material and mechanical properties, but are rarely studied. The current study identifies such an interaction between laminin derived peptide, IKVAV, and collagen derived matrix metalloprotease degradable peptide, GPQGIWGQ. Previous studies using these peptides did not identify their interactions’ ability to mechanically stabilize the hydrogel during degradation. This work underscores the need for greater matrix characterization and consideration of bioactive signaling element effects temporally on the matrix’s material and mechanical properties, as they can contribute to cellular response.