There is increasing evidence that matrix stiffness modulates various phenotypic activities of cells surrounded by a three-dimensional (3D) matrix. These findings suggest that matrix stiffness can also regulate dermal fibroblasts activities to remodel, repair, and recreate skin dermis, but this has not yet been systematically demonstrated to date. This study examines the effects of matrix rigidity on the morphology, growth rates, and glycosaminoglycan (GAG) production of dermal fibroblasts cultured in collagen-based hydrogels with controlled elastic moduli. The elastic moduli (E) of collagen hydrogels were increased from 0.7 to 1.6 and 2.2 kPa by chemically cross-linking collagen fibrils with poly(ethylene glycol) disuccinimidylester. Increasing E of the hydrogel led to decreases in cellular spreading, nuclear aspect ratio, and growth rate. In contrast, the cellular GAG production level was elevated by increasing E from 0.7 to 1.6 kPa. The larger accumulation of GAG in the stiffer hydrogel led to increased water retention during exposure to air, as confirmed with magnetic resonance imaging. Additionally, in a chicken chorioallantoic membrane, a cell-encapsulating hydrogel with E of 1.6 kPa created dermis-like tissue with larger amount of GAG and density of blood vessels, while a cell-hydrogel construct with E of 0.7 kPa generated scar-like tissue. Overall, the results of this study will be highly useful for designing advanced tissue engineering scaffolds that can enhance the quality of a wide array of regenerated tissues including skin.