Glioblastoma (GBM) is the most common and aggressive form of primary brain tumor with a median survival of 12-15 months, and the mechanisms underlying GBM tumor progression remain largely elusive. Given the importance of tumor niche signaling in driving GBM progression, there is a strong need to develop in vitro models to facilitate analysis of brain tumor cell-niche interactions in a physiologically relevant and controllable manner. Here we report the development of a bioengineered 3D brain tumor model to help elucidate the effects of matrix stiffness on GBM cell fate using poly(ethylene-glycol) (PEG)-based hydrogels with brain-mimicking biochemical and mechanical properties. We have chosen PEG given its bioinert nature and tunable physical property, and the resulting hydrogels allow tunable matrix stiffness without changing the biochemical contents. To facilitate cell proliferation and migration, CRGDS and a MMP-cleavable peptide were chemically incorporated. Hyaluronic acid (HA) was also incorporated to mimic the concentration in the brain extracellular matrix. Using U87 cells as a model GBM cell line, we demonstrate that such biomimetic hydrogels support U87 cell growth, spreading, and migration in 3D over the course of 3 weeks in culture. Gene expression analyses showed U87 cells actively deposited extracellular matrix and continued to upregulate matrix remodeling genes. To examine the effects of matrix stiffness on GBM cell fate in 3D, we encapsulated U87 cells in soft (1 kPa) or stiff (26 kPa) hydrogels, which respectively mimics the matrix stiffness of normal brain or GBM tumor tissues. Our results suggest that changes in matrix stiffness induce differential GBM cell proliferation, morphology, and migration modes in 3D. Increasing matrix stiffness led to delayed U87 cell proliferation inside hydrogels, but cells formed denser spheroids with extended cell protrusions. Cells cultured in stiff hydrogels also showed upregulation of HA synthase 1 and matrix metalloproteinase-1 (MMP-1), while simultaneously downregulating HA synthase 2 and MMP-9. This suggests that varying matrix stiffness can induce differential ECM deposition and remodeling by employing different HA synthases or MMPs. Furthermore, increasing matrix stiffness led to simultaneous upregulation of Hras, RhoA, and ROCK1, suggesting a potential link between the mechanosensing pathways and the observed differential cell responses to changes in matrix stiffness. The bioengineered 3D hydrogel platform reported here may provide a useful 3D in vitro brain tumor model for elucidating the mechanisms underlying GBM progression, as well as for evaluating the efficacy of potential drug candidates for treating GBM.