Physical cues, such as cell microenvironment stiffness, are known to be important factors in modulating cellular behaviors such as differentiation, viability, and proliferation. Apart from being able to trigger these effects, mechanical stiffness tuning is a very convenient approach that could be implemented readily into smart scaffold designs. In this study, fibrinogen-modified poly(ethylene glycol)-diacrylate (PEG-DA) based hydrogels with tunable mechanical properties were synthesized and applied to control the spheroid formation and liver-like function of encapsulated Huh7.5 cells in an engineered, three-dimensional liver tissue model. By controlling hydrogel stiffness (0.1–6 kPa) as a cue for mechanotransduction representing different stiffness of a normal liver and a diseased cirrhotic liver, spheroids ranging from 50 to 200 μm were formed over a three week time-span. Hydrogels with better compliance (i.e. lower stiffness) promoted formation of larger spheroids. The highest rates of cell proliferation, albumin secretion, and CYP450 expression were all observed for spheroids in less stiff hydrogels like a normal liver in a healthy state. We also identified that the hydrogel modification by incorporation of PEGylated-fibrinogen within the hydrogel matrix enhanced cell survival and functionality possibly owing to more binding of autocrine fibronectin. Taken together, our findings establish guidelines to control the formation of Huh7.5 cell spheroids in modified PEGDA based hydrogels. These spheroids may serve as models for applications such as screening of pharmacological drug candidates.