The promising potential of bioorthogonal catalysis in biomedicine is inspiring incremental efforts to design strategies that regulate drug activity in living systems. To achieve this, it is not only essential to develop customized inactive prodrugs and biocompatible metal catalysts but also the right physical environment for them to interact and enable drug production under spatial and/or temporal control. Toward this goal, here, we report the first inactive precursor of the potent broad-spectrum anticancer drug paclitaxel (a.k.a. Taxol) that is stable in cell culture and labile to Pd catalysts. This new prodrug is effectively uncaged in cancer cell culture by Pd nanosheets captured within agarose and alginate hydrogels, providing a biodegradable catalytic framework to achieve controlled release of one of the most important chemotherapy drugs in medical practice. The compatibility of bioorthogonal catalysis and physical hydrogels opens up new opportunities to administer and modulate the mobility of transition metal catalysts in living environs.