Many strategies for controlling the fate of transplanted stem cells rely on the concurrent delivery of soluble growth factors that have the potential to produce undesirable secondary effects in surrounding tissue. Such off target effects could be eliminated by locally presenting growth factor peptide mimics from biomaterial scaffolds to control stem cell fate. Peptide mimics of bone morphogenetic protein 2 (BMP-2) were synthesized by solid phase Fmoc-peptide synthesis and covalently bound to alginate hydrogels via either carbodiimide or sulfhydryl-based coupling strategies. Successful peptide conjugation was confirmed by H-1 NMR spectroscopy and quantified by fluorescently labeling the peptides. Peptides derived from the knuckle epitope of BMP-2, presented from both 2D surfaces and 3D alginate hydrogels, were shown to increase alkaline phosphatase activity in clonally derived murine osteoblasts. Furthermore, when presented in 3D hydrogels, these peptides were shown to initiate Smad signaling, upregulate osteopontin production, and increase mineral deposition with clonally derived murine mesenchymal stem cells. These data suggest that these peptide-conjugated hydrogels may be effective alternatives to local BMP-2 release in directly and spatially eliciting osteogenesis from transplanted or host osteoprogenitors in the future.