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There is a need to develop novel cytocompatible hydrogels for cell encapsulation and delivery in regenerative medicine. The objective of this work was to synthesize isocyanato ethyl methacryloyl-functionalized sericin and determine its material properties as a natural hydrogel for the encapsulation and delivery of human mesenchymal stem cells (MSCs) in regenerative medicine. Sericin extracted from silk cocoons was reacted with 2-isocyanatoethyl methacrylate (IEM) or methacrylic anhydride (MA) to produce sericin urethane methacryloyl (SerAte-UM) or sericin methacryloyl (SerAte-M, control) biopolymers, respectively. The hydrogels produced by photo-crosslinking of the biopolymers in an aqueous solution were characterized with respect to gelation kinetics, microstructure, compressive modulus, water content, degradation, permeability, and viability of encapsulated cells. The secondary structure of citric acid-extracted sericin was not affected by functionalization with IEM or MA. SerAte-UM hydrogel was slightly more hydrophilic than SerAte-M. The gelation time of SerAte-UM hydrogel decreased with an increasing degree of modification. The photo-polymerized SerAte-UM hydrogel had a highly porous, fibrous, honeycomb microstructure with an average pore size in the 40–50 µm range. The compressive modulus, swelling ratio, and permeability of SerAte-UM hydrogel depended on the degree of modification of sericin, and the mass loss after 21 days of incubation in aqueous solution was