The combined use of natural ECM components and synthetic materials offers an attractive alternative to fabricate hydrogel-based tissue engineering scaffolds to study cell-matrix interactions in three-dimensions (3D). A facile method was developed to modify gelatin with cysteine via a bifunctional PEG linker, thus introducing free thiol groups to gelatin chains. A covalently crosslinked gelatin hydrogel was fabricated using thiolated gelatin and poly(ethylene glycol) diacrylate (PEGdA) via thiol-ene reaction. Unmodified gelatin was physically incorporated in a PEGdA-only matrix for comparison. We sought to understand the effect of crosslinking modality on hydrogel physicochemical properties and the impact on 3D cell entrapment. Compared to physically incorporated gelatin hydrogels, covalently crosslinked gelatin hydrogels displayed higher maximum weight swelling ratio (Qmax), higher water content, significantly lower cumulative gelatin dissolution up to 7 days, and lower gel stiffness. Furthermore, fibroblasts encapsulated within covalently crosslinked gelatin hydrogels showed extensive cytoplasmic spreading and the formation of cellular networks over 28 days. In contrast, fibroblasts encapsulated in the physically incorporated gelatin hydrogels remained spheroidal. Hence, crosslinking ECM protein with synthetic matrix creates a stable scaffold with tunable mechanical properties and with long-term cell anchorage points, thus supporting cell attachment and growth in the 3D environment.