We have developed proteolytically degradable hydrogels with covalently immobilized fluorogenic protease substrates to visualize extracellular proteolytic activity and cell migration in three dimensions. Dye quenched-bovine serum albumin (DQ-BSA), a quenched, proteolytically activated fluorogenic substrate, was conjugated to poly(ethylene glycol) (PEG)-monoacrylate, and the product (DQ-BSA-PEG) was then covalently incorporated into proteolytically degradable and cell adhesive PEG hydrogels via photopolyinerization. The DQ-BSA-PEG substrate in solution and incorporated into hydrogels exhibited significantly enhanced fluorescence after exposure to enzymes. Fibroblasts seeded within this hydrogel spread in three dimensions and extended lamellipodia. Cell migration and proteolytic activity were visualized using confocal microscopy. Proteolytic activity was concentrated near cell surfaces and remained present in the tracks where cell migration had occurred.