Polymers or hydrogels containing modified cydodextrin (CD) are highly useful in drug delivery applications, as CD is a cytocompatible amphiphilic molecule that can complex with a variety of hydrophobic drugs. Here, we designed modular photodick thiol-ene hydrogels from derivatives of beta CD and poly(ethylene glycol) (PEG), including beta CD-allylether (beta CD-AE), beta CD-thiol (beta CD-SH), PEG-thiol (PEGSH), and PEG-norbornene (PEGNB). Two types of CD PEG hybrid hydrogels were prepared using radical-mediated thiol-ene photodick reactions. Specifically, thiol-allylether hydrogels were formed by reacting multiarm PEGSH and beta CD-AE, and thiol-norbomene hydrogels were formed by cross-linking beta CD-SH and multiarm PEGNB. We characterized the properties of these two types of thiol-ene hydrogels, including gelation kinetics, gel fractions, hydrolytic stability, and cytocompatibility. Compared with thiol-allylether hydrogels, thiol-norbomene photoclick reaction formed hydrogels with faster gelation kinetics at equivalent macromer contents. Using curcumin, an anti-inflammatory and anticancer hydrophobic molecule, we demonstrated that CD-cross-linked PEG-based hydrogels, when compared with pure PEG-based hydrogels, afforded higher drug loading efficiency and prolonged delivery in vitro. Cytocompatibility of these CD-cross-linked hydrogels were evaluated by in situ encapsulation of radical sensitive pancreatic MIN6 beta-cells. All formulations and cross-linking conditions tested were cytocompatible for cell encapsulation. Furthermore, hydrogels cross-linked by beta CD-SH showed enhanced cell proliferation and insulin secretion as compared to gels cross-linked by either dithiothreitol (DTT) or beta CD-AE, suggesting the profound impact of both macromer compositions and gelation chemistry on cell fate in chemically cross-linked hydrogels.