This study aims to explore the differential effect of scaffold composition and architecture on chondrogenic response to dynamic strain stimulation using encapsulating PEG-based hydrogels and primary bovine chondrocytes. Proteins and proteoglycans were conjugated to functionalized poly(ethylene glycol) (PEG) and immobilized in PEG hydrogels to create bio-synthetic materials to be used as scaffolds. Four different compositions were tested, including: PEG-Proteoglycan (PP), PEG-Fibrinogen (PF), PEG-Albumin (PA), and PEG only. Primary articular chondrocytes were encapsulated in the hydrogel scaffolds and subjected to 15% dynamic compressive strain stimulation at 1-Hz frequency for 28 days. Stimulation of PP, PF, PA and PEG constructs resulted in a respective increase in the unconfined true compressive modulus by 32%, 45.4%, 33.6%, and 28.2%, compared to their static controls. The PF showed a significantly larger relative increase in the modulus in comparison to all other scaffolds tested. These results support the hypothesis that mechanical stimulation and material bioactivity have a significant effect on the reported chondrocyte response. Similar trends were observed with the swelling ratio of the constructs. These findings indicate that while stimulation causes metabolic changes in chondrocytes seeded in PEG hydrogels, the matrix bioactivity has a significant role in enhancing chondrocyte mechanotransduction in encapsulating scaffolds subjected to physical deformations.