Extracellular matrix (ECM) stiffness is fundamental in cell division, movement and differentiation. The stiffness that cells sense is determined not only by the elastic modulus of the ECM material but also by ECM geometry and cell density. We hypothesized that these factors would influence cell traction-induced matrix deformations and cellular differentiation in bone marrow stromal cells (BMSCs). To achieve this, we cultivated BMSCs on polyacrylamide hydrogels that varied in elastic modulus and geometry and measured cell spreading, cell-imparted matrix deformations and differentiation. At low cell density BMSCs spread to a greater extent on stiff compared with soft hydrogels, or on thin compared with thick hydrogels. Cell-imparted matrix deformations were greater on soft compared with stiff hydrogels or thick compared with thin hydrogels. There were no significant differences in osteogenic differentiation relative to hydrogel elastic modulus and thickness. However, increased cell density and/or prolonged culture significantly reduced matrix deformations on soft hydrogels to levels similar to those on stiff substrates. This suggests that at high cell densities cell traction-induced matrix displacements are reduced by both neighbouring cells and the constraint imposed by an underlying stiff support. This may explain observations of the lack of difference in osteogenic differentiation as a function of stiffness.