Multidomain peptides are a class of amphiphilic self-assembling peptides with a modular ABA block motif in which the amphiphilic B block drives self-assembly while the flanking A blocks, which are electrostatically charged, control the conditions under which assembly takes place. Previously we have shown that careful selection of the amino acids in the A and B blocks allow one to control the self-assembled fiber length and viscoelastic properties of formed hydrogels. Here we demonstrate how the modular nature of this peptide assembler can be designed for biological applications. With control over fiber length and diameter, gelation conditions, and viscoelastic properties, we can develop suitable materials for biological applications. Going beyond a simple carrier for cell delivery, a biofunctional scaffold will interact with the cells it carries, promoting advantageous cell-matrix interactions. We demonstrate the design of a multidomain peptide into a bioactive variant by incorporation of a matrix metalloprotease 2 (MMP-2) specific cleavage site and cell adhesion motif. Gel formation and rheological properties were assessed and compared to related peptide hydrogels. Proteolytic degradation by collagenase IV was observed in a gel weight loss study and confirmed by specific MMP-2 degradation monitored by mass spectrometry and cryo-trans mission electron microscopy (cryo-TEM). Combination of this cleavage site with the cell adhesion motif RGD resulted in increased cell viability and cell spreading and encouraged cell migration into the hydrogel matrix. Collectively the structural, mechanical, and bioactive properties of this multidomain peptide hydrogel make it suitable as an injectable material for a variety of tissue engineering applications.