The importance of mesenchymal stem cells (MSC) in vascular regeneration is becoming increasingly recognized. However, few in vitro studies have been performed to identify the effects of environmental elasticity on the differentiation of MSC into vascular cell types. Electrospinning and photopolymerization techniques were used to fabricate a three-dimensional (3-D) polyethylene glycol dimethacrylate nanofiber hydrogel matrix with tunable elasticity for use as a cellular substrate. Compression testing demonstrated that the elastic modulus of the hydrated 3-D matrices ranged from 2 to 15 kPa, similar to the in vivo elasticity of the intima basement membrane and media layer. MSC seeded on rigid matrices (8-15 kPa) showed an increase in cell area compared with those seeded on soft matrices (2-5 kPa). Furthermore, the matrix elasticity guided the cells to express different vascular-specific phenotypes with high differentiation efficiency. Around 95% of MSC seeded on the 3-D matrices with an elasticity of 3 kPa showed Flk-1 endothelial markers within 24h, while only 20% of MSC seeded on the matrices with elasticity >8 kPa demonstrated Flk-1 marker. In contrast, ∼80% of MSC seeded on 3-D matrices with elasticity >8 kPa demonstrated smooth muscle α-actin marker within 24h, while fewer than 10% of MSC seeded on 3-D matrices with elasticity <5 kPa showed α-actin markers. The ability to control MSC differentiation into either endothelial or smooth muscle-like cells based purely on the local elasticity of the substrate could be a powerful tool for vascular tissue regeneration.