Scaffold-based delivery of bioactive molecules capable of directing stem cell differentiation is critical to the development of point-of-care cell therapy for orthopedic repair. Dexamethasone-conjugated hyaluronic acid (HA-DXM) was synthesized and combined with hydrolytically degradable, photo-cross-linkable PEG-bis(2-acryloyloxy propanoate) (PEG-bis-AP) to form semi-IPNs. Dexamethasone (DX) release was limited in physiological buffer and substantially increased in the presence of encapsulated human mesenchymal stem cells (hMSCs) or exogenous hyaluronidase, confirming that release occurred primarily by a cell-mediated enzymatic mechanism. hMSCs encapsulated in PEG-bis-AP/HA-DXM semi-IPNs increased osteoblast-specific gene expression, alkaline phosphatase activity, and matrix mineralization, attaining levels that were not significantly different from positive controls consisting of hMSCs in PEG-bis-AP/native HA cultured with DX supplementation in the culture medium. These studies demonstrate that PEG-bis-AP/HA-DXM semi-IPNs can provide cell-mediated release of bioactive free DX that induces hMSC osteogenic differentiation. This approach offers an efficient system for local delivery of osteogenic molecules empowering point of care applications.