The pericellular matrix (PCM) surrounding chondrocytes is thought to play an important role in transmitting biochemical and biomechanical signals to the cells, which regulates many cellular functions including tissue homeostasis. To better understand chondrocytes interactions with their PCM, three-dimensional poly(ethylene glycol) (PEG) hydrogels containing Arg-Gly-Asp (RGD), the cell-adhesion sequence found in fibronectin and which is present in the PCM of cartilage, were employed. RGD was incorporated into PEG hydrogels via tethers at 0.1, 0.4 and 0.8 mM concentrations. Bovine chondrocytes were encapsulated in the hydrogels and subjected to dynamic compressive strains (0.3 Hz, 18% amplitude strain) for 48h, and their response assessed by cell morphology, ECM gene expression, cell proliferation and matrix synthesis. Incorporation of RGD did not influence cell morphology under free swelling conditions. However, the level of cell deformation upon an applied strain was greater in the presence of RGD. In the absence of dynamic loading, RGD appears to have a negative effect on chondrocyte phenotype, as seen by a 4.7-fold decrease in collagen II/collagen I expressions in 0.8mM RGD constructs. However, RGD had little effect on early responses of chondrocytes (i.e. cell proliferation and matrix synthesis/deposition). When isolating RGD as a biomechanical cue, cellular response was very different. Chondrocyte phenotype (collagen II/collagen I ratio) and proteoglycan synthesis were enhanced with higher concentrations of RGD. Overall, our findings demonstrate that RGD ligands enhance cartilage-specific gene expression and matrix synthesis, but only when mechanically stimulated, suggesting that cell-matrix interactions mediate chondrocyte response to mechanical stimulation.