Incorporation of extracellular matrix (ECM) and hydrogel in microfluidic 3D cell culture platforms is important to create a physiological microenvironment for cell morphogenesis and to establish 3D co-culture models by hydrogel compartmentalization. Here, we describe a simple and scalable ECM patterning method for microfluidic cell cultures by achieving hydrogel confinement due to the geometrical expansion of channel heights (stepped height features) and capillary burst valve (CBV) effects. We first demonstrate a sequential “pillar-free” hydrogel patterning to form adjacent hydrogel lanes in enclosed microfluidic devices, which can be further multiplexed with one to two stepped height features. Next, we developed a novel “spheroid-in-gel” culture device that integrates (1) an on-chip hanging drop spheroid culture and (2) a single “press-on” hydrogel confinement step for rapid ECM patterning in an open-channel microarray format. The initial formation of breast cancer (MCF-7) spheroids was achieved by hanging a drop culture on a patterned polydimethylsiloxane (PDMS) substrate. Single spheroids were then directly encapsulated on-chip in individual hydrogel islands at the same positions, thus, eliminating any manual spheroid handling and transferring steps. As a proof-of-concept to perform a spheroid co-culture, endothelial cell layer (HUVEC) was formed surrounding the spheroid-containing ECM region for drug testing studies. Overall, this developed stepped height-based hydrogel patterning method is simple to use in either enclosed microchannels or open surfaces and can be readily adapted for in-gel cultures of larger 3D cellular spheroids or microtissues.