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Rotator cuff injuries present a clinical challenge for repair due to current limitations in functional regeneration of the native tendon-to-bone enthesis. A biomaterial that can regionally instruct unique tissue-specific phenotypes offers potential to promote enthesis repair. We have recently demonstrated the mechanical benefits of a stratified triphasic biomaterial made up of tendon- and bone-mimetic collagen scaffold compartments connected via a continuous hydrogel, and we now explore the potential of a biologically favorable enthesis hydrogel for this application. Here we report in vitro behavior of human mesenchymal stem cells (hMSCs) within thiolated gelatin (Gel-SH) hydrogels in response to chondrogenic stimuli as well as paracrine signals derived from MSC-seeded bone and tendon scaffold compartments. Chondrogenic differentiation media promoted upregulation of cartilage and entheseal fibrocartilage matrix markers COL2 , COLX , and ACAN as well as the enthesis-associated transcription factors SCX , SOX9 , and RUNX2 in hMSCs within Gel-SH. Similar effects were observed in response to TGF-β3 and BMP-4, enthesis-associated growth factors known to play a role in entheseal development and maintenance. Conditioned media generated by hMSCs seeded in tendon- and bone-mimetic collagen scaffolds influenced patterns of gene expression regarding enthesis-relevant growth factors, matrix markers, and tendon-to-bone transcription factors for hMSCs within the material. Together, these findings demonstrate that a Gel-SH hydrogel provides a permissive environment for enthesis tissue engineering and highlights the significance of cellular crosstalk between adjacent compartments within a spatially graded biomaterial.