This study investigated the effects of introducing hydroxyapatite nanoparticles into a matrix metalloproteinase (MMP) sensitive poly(ethylene glycol) (PEG) hydrogel containing cell adhesion peptides of RGD for bone tissue engineering. MC3T3-E1 pre-osteoblasts were encapsulated in the biomimetic PEG hydrogel, which was formed from the photoclick thiol-norbornene reaction system, cultured for up to 28 d in growth medium or osteogenic differentiation medium, and evaluated by cellular morphology and differentiation by alkaline phosphatase (ALP) activity and bone-like extracellular matrix deposition for mineral and collagen. Hydroxyapatite nanoparticles were incorporated during hydrogel formation and cell encapsulation at 0%, 0.1% or 1% (w/w). Incorporation of hydroxyapatite nanoparticles did not affect the hydrogel properties as measured by compressive modulus and equilibrium swelling. In growth medium, encapsulated MC3T3-E1 cells remained largely round regardless of hydroxyapatite concentration. ALP activity increased by 25% at day 14 and total collagen content increased by 55% at day 28 with increasing hydroxyapatite concentration from 0% to 1%. In differentiation medium, cell spreading was evident regardless of hydroxyapatite indicating that the MC3T3-E1 cells were able to degrade the hydrogel. For the 1% hydroxyapatite condition, ALP activity was 27% higher at day 14 and total collagen content was 22% higher at day 28 in differentiation medium when compared to growth medium. Mineral deposits were more abundant and spatial elaboration of collagen type I was more evident in the 1% (w/w) hydroxyapatite condition with differentiation medium when compared to all other conditions. Overall, osteogenesis was observed in the hydrogels with hydroxyapatite nanoparticles in growth medium but was enhanced in differentiation medium. In summary, a biomimetic hydrogel comprised of MMP-sensitive crosslinks, RGD cell adhesion peptides, and 1% (w/w) hydroxyapatite nanoparticles is promising for bone tissue engineering.