Hydrogels are useful drug release systems and tissue engineering scaffolds. However, synthetic hydrogels often require harsh gelation conditions and can contain toxic by-products while naturally derived hydrogels can transmit pathogens and in general have poor mechanical properties. Thus, there is a need for a hydrogel that forms under ambient conditions, is non-toxic, xeno-free, and has good mechanical properties. A recombinant spider silk protein-derived hydrogel that rapidly forms at 37 °C is recently developed. The temperature and gelation times are well-suited for an injectable in situ polymerising hydrogel, as well as a 3D cell culture scaffold. Here, it is shown that the diffusion rate and the mechanical properties can be tuned by changing the protein concentration and that human fetal mesenchymal stem cells encapsulated in the hydrogels show high survival and viability. Furthermore, mixtures of recombinant spider silk proteins and green fluorescent protein (GFP) form gels from which functional GFP is gradually released, indicating that bioactive molecules are easily included in the gels, maintain activity and can diffuse through the gel. Interestingly, encapsulated ARPE-19 cells are viable and continuously produce the growth factor progranulin, which is detected in the cell culture medium over the study period of 31 days.