Many systems have been proposed for the encapsulation of bone marrow stromal cells (BMSCs) within degradable hydrogels. Here, we use a novel cyclic acetal-based biomaterial formed from 5-ethyl-5-(hydroxymethyl)-beta,beta-dimethyl-1,3-dioxane-2-ethanol diacrylate (EHD) and poly(ethylene glycol) diacrylate (PEGDA). A cyclic acetal-based hydrogel may be preferred as cyclic acetals hydrolytically degraded into diols and carbonyls as primary degradation products, which may not affect local acidity, unlike other widely investigated polymers. The EHD monomer and PEGDA polymer may be fabricated into a EH-PEG hydrogel by radical polymerization initiated by the ammonium persulfate (APS) and N,N,N',N'-tetramethylethylenediamine (TEMED) system. The objective of this work is to determine whether the components utilized in the fabrication of EH-PEG hydrogels as well as the EH-PEG hydrogels permit BMSC viability, metabolic activity, and osteodifferentiation. Cell viability and metabolic activity were assessed after 30 min, 1 h, and 3 h of exposure to pertinent concentrations of the initiator system (10-20 mM). Osteodifferentiation was assessed by alkaline phosphatase and osteocalcin expression after a short exposure to the initiator system to simulate the encapsulation process. Lastly, cell viability was assessed immediately after encapsulation and after 7 days of culture within the EH-PEG hydrogels. Results indicate that the metabolic activity and viability of BMSCs are minimally affected, and that osteodifferentiation is not significantly affected by the APS-TEMED initiator system. Also, encapsulated BMSCs maintained viability within EH-PEG hydrogels for 7 days. This work demonstrates that the EH-PEG hydrogel is a viable option for the encapsulation and osteodifferentiation of BMSCs.