We present polymeric hydrogel biomaterials that are biomimetic both in their synthesis and degradation. The design of oligopeptide building blocks with dual enzymatic responsiveness allows us to create polymer networks that are formed and functionalized via enzymatic reactions and are degradable via other enzymatic reactions, both occurring under physiological conditions. The activated transglutaminase enzyme factor XIIIa was utilized for site-specific coupling of prototypical cell adhesion ligands and for simultaneous cross-linking of hydrogel networks from factor XIIIa substrate-modified multiarm poly(ethylene glycol) macromers. Ligand incorporation is nearly quantitative and thus controllable, and does not alter the network's macroscopic properties over a concentration range that elicits specific cell adhesion. Living mammalian cells can be encapsulated in the gels without any noticeable decrease in viability. The degradation of gels can be engineered to occur, for example, via cell-secreted matrix metalloproteinases, thus rendering these gels interesting for biomedical applications such as drug delivery systems or smart implants for in situ tissue engineering.