Two-dimensional cell culture studies have shown that matrix rigidity can influence cell function, but little is known about how matrix physical properties, and their changes with time, influence cell function in 3-D. Biosynthetic hydrogels based on PEGylated fibrinogen permit the initial decoupling of matrix chemical and mechanical properties, and are thus potentially attractive for addressing this question. However, the mechanical stability of these gels due to passive hydrolysis and cell-mediated remodeling has not previously been addressed. Here, we show that the bulk mechanical properties of acellular PEG-fibrinogen hydrogels significantly decrease over time in PBS regardless of matrix cross-linking density in 7 days. To compensate, smooth muscle cells (SMCs) were encapsulated and stimulated to produce their own matrix using ascorbic acid or TGF-beta1. Ascorbic acid treatment improved the mechanical properties of the constructs after 14 days in less cross-linked matrices, but TGF-beta1 did not. The increase in matrix modulus of the constructs was not due to an increase in type I collagen deposition, which remained low and pericellular regardless of cross-link density or the soluble factor applied. Instead, ascorbic acid, but not TGF-beta1, preferentially enhanced the contractile SMC phenotype in the less cross-linked gels. Inhibition of contractility reduced cell spreading and the expression of contractile markers, and eliminated any beneficial increase in matrix modulus induced by cell-generated contraction of the gels. Together, these data show that PEG-fibrinogen hydrogels are susceptible to both hydrolysis and proteolysis, and suggest that some soluble factors may stimulate matrix remodeling by modulating SMC phenotype instead of inducing ECM synthesis in a 3-D matrix.