In designing a tissue engineering strategy for cartilage repair, selection of both the bioreactor, and scaffold is important to the development of a mechanically functional tissue. The hydrodynamic environment associated with many bioreactors enhances nutrient transport, but also introduces fluid shear stress, which may influence cellular response. This study examined the combined effects of hydrogel cross-linking and the hydrodynamic environment on early chondrocyte response. Specifically, chondrocytes were encapsulated in poly(ethylene glycol) (PEG) hydrogels having two different cross-linked structures, corresponding to a low and high cross-linking density. Both cross-linked gels yielded high water contents (92% and 79%, respectively) and mesh sizes of 150 and 60 A respectively. Cell-laden PEG hydrogels were cultured in rotating will vessels (RWV) or under static cultures for up to 5 days. Rotating cultures yielded low fluid shear stresses (<= 0.11 Pa) at the hydrogel periphery indicating a laminar hydrodynamic environment. Chondrocyte response was measured through total DNA content, total nitric oxide (NO) production, and matrix deposition for glycosaminoglycans (GAG). In static Cultures, gel cross-linking had no effect on DNA content, NO production, or GAG production; although GAG production increased with culture time for both cross-linked gels. In rotating cultures, DNA content increased, NO production decreased, and overall GAG production decreased when compared to static controls for the low cross-linked gels. For the high cross-linked gels, the hydrodynamic environment had no effect on DNA content, but exhibited similar results to the low cross-linked gel for NO production, and matrix production. Our findings demonstrated that at early Culture times, when there is limited matrix production, the hydrodynamic environment dramatically influences cell response in a manner dependent on the gel cross-linking, which may impact long-term tissue development.