Stem cell use in bladder tissue engineering is a recently addressed area of investigation that has generated excitement as a novel way to restore and regenerate lost or damaged urinary bladder tissue. The remodelling of smooth muscle plays a significant role in bladder repair and regeneration. De-differentiation of smooth muscle cells from a contractile phenotype to a synthetic proliferative phenotype is characterised by smooth muscle hypertrophy and fibrosis, and leads to a poorly compliant bladder. To elucidate the underlying mechanisms of such phenomena, recent efforts in bladder tissue engineering have focused on understanding smooth muscle biology and associated mechanisms of bladder diseases. In this thesis we have designed a synthetic poly (ethylene glycol) (PEG) hydrogel for stem cell and drug delivery aimed to enhance control smooth muscle cell phenotype and thus assist in bladder repair and regeneration. We began by developing a method for isolation of cells from the bladder wall. Traditionally urothelium and smooth muscle cells are separated by dissection, and primary cultures are initiated in distinctly different medium formulations to obtain homogenous cultures and limit contaminating cells. However, the bladder wall harbours, apart from urothelial and smooth muscle cells, fibroblasts that have similar nutritional requirements and are likely candidates to contaminate smooth muscle cell cultures. Isolation of these three cell types by conjugation to magnetic beads and repeated separations allowed us to obtain pure cell populations. Furthermore, this technique permitted us to freely choose any specific medium formulation we wished to utilise. We then turned our attentions to engineering a materials system, by chemically and physically tuning a PEG hydrogel in terms of ligand concentration and matrix stiffness, to provide a three-dimensional environment for optimal spreading of human smooth muscle cells and mesenchymal stem cells. Cell viability, proliferation and differentiation were assessed in optimised hydrogels. Compared to cultures on traditional two-dimensional plastic, mesenchymal stem cells cultured within our three-dimensional hydrogels acquired a smooth muscle cell-like phenotype and smooth muscle cells obtained a less de-differentiated phenotype. In addition, we demonstrated cell-demanded gel degradation and deposition of newly synthesised extracellular matrix proteins. In order to modulate cell phenotypes further, we hypothesised that cell differentiation could be directed by the adhesion ligands made available within the matrix. In this manner, cells that were exposed to a matrix presenting certain integrin-binding ligands would begin expressing the corresponding integrins in order to adhere to the matrix. Consequently, we explored the effect of various specific integrin-binding ligands on mesenchymal stem cell integrin expression and differentiation. Fibronectin (FN) fragments engineered to demonstrate specificity to different integrins, namely α5β1 (FNIII9*10) and αvβ3 (FNIII10), were conjugated to PEG functionalised with vinyl sulfone and compared to fibronectin wild type (FNIIIWT) fragment and the RGD peptide, which both provide binding sites for a range of integrins. We found that assembly of focal adhesions and formation of stress fibres were altered due to the specific fragments provided, and expression of integrin- and smooth muscle cell specific genes varied in mesenchymal stem cells cultured within hydrogels functionalised with different fragments. Moreover, these fibronectin fragments turned out to be especially helpful for improved attachment of urothelial cells on top of hydrogels. With this biomaterial system in hand, we sought to develop a co-culture model of the bladder wall that permitted mesenchymal stem cells and urothelial cells cultured within / on top of PEG hydrogels, and to explore the combinatorial effect of ligand binding and cell-cell interactions on mesenchymal stem cell fate. Interestingly, we found that co-culturing with urothelial cells influenced gene expression of mesenchymal stem cells differently, depending on the protein fragment to which they were adhering. Mesenchymal stem cells cultured within PEG-FNIIIWT hydrogels were shown to up-regulate smooth muscle cell specific genes, while down-regulation was demonstrated in PEG-RGD, PEG-FNIII9*10 and PEG-FNIII10 hydrogels. Again, mesenchymal stem cells cultured within PEG-FNIIIWT hydrogels were shown to up-regulate integrin expressions α5, αv, β1 and β3, while down-regulation of the same genes was demonstrated for cells cultured within PEG-FNIII9*10 hydrogels, and a more complex pattern of integrin regulation was found for cells cultured within PEG-RGD and PEG-FNIII10 hydrogels. Finally, we investigated a novel approach to growth factor delivery in a controlled release manner, by providing cell- and growth factor binding protein fragments. In this system we show that transforming growth factor beta 1 (TGF-β1) release from PEG hydrogels influence smooth muscle cell specific gene expressions differently depending on the integrin- and growth factor binding proteins available within the hydrogel. Delivery of TGF-β1 within PEG-FNIIIWT hydrogels was shown to up-regulate smooth muscle specific genes in mesenchymal stem cells, while the other conditions displayed more complex patterns of gene expression. Further experiments are required to characterise the conjugation of PEGprotein-growth factor, and the release profiles for the growth factor in the different conditions. In conclusion, this thesis investigates the effect of various chemical and physical signals on mesenchymal stem cell-to-smooth muscle cell differentiation in an in vitro model to further understand cell-cell and cell-extracellular matrix interactions and create improved artificial microenvironments for directing and / or maintaining cell differentiation. The PEG hydrogel that we designed permits the co-culture of cells as well as the incorporation of peptides and proteins such as cell adhesion- and growth factor binding ligands, and growth factors for directing the differentiation of human mesenchymal stem cells into smooth muscle cells. Here, we explore these features and their effects on cell differentiation in vitro. Hence, our PEG hydrogel system can serve both as an in vitro model for studying basic cell biology, and as a cell delivery vehicle for improved bladder tissue regeneration.