The extracellular environment controls many cellular activities thereby linking external material cues to internal cell function. By better understanding these processes, synthetic extracellular material niches can be tailored to present cells with highly regulated physical and/or chemical cues that promote or suppress selected cell functions. Here, poly(ethylene glycol) (PEG) hydrogels were functionalized with fluvastatin-releasing grafts and growth factor binding heparin domains to enable the dynamic exchange of information between the material and cells from the outside-in and inside-out (i.e., bidirectional signaling). By incorporating a fluvastatin-releasing graft and carefully controlling the dose and temporal release, materials were designed to promote bone morphogenic protein (BMP2) and alkaline phosphatase (ALP) production by human mesenchymal stem cells (hMSCs). When the release of fluvastatin was controlled to occur over 2 weeks, BMP2 and ALP production was increased 2.2-fold and 1.7-fold, respectively, at day 28 compared to hMSCs cultured in the absence of fluvastatin. By introducing a heparin functionality into the gel to sequester and localize the hMSC-produced BMP2, the osteogenic differentiation of hMSCs was further augmented over fluvastatin delivery alone. Osteopontin and core binding factor α1 gene expression was 6-fold and 4-fold greater for hMSCs exposed to fluvastatin in the presence of the heparin functionalities, respectively. These results demonstrate how multifunctional gels that interact with cells in a bidirectional manner can efficiently promote selected cell functions, such as the osteogenic differentiation of hMSCs.