Polyethylene glycol (PEG) hydrogels are widely used in a variety of biomedical applications, including matrices for controlled release of biomolecules and scaffolds for regenerative medicine. The design, fabrication, and characterization of PEG hydrogels rely on the understanding of fundamental gelation kinetics as well as the purpose of the application. This review article will focus on different polymerization mechanisms of PEG-based hydrogels and the importance of these biocompatible hydrogels in regenerative medicine applications. Furthermore, the design criteria that are important in maintaining the availability and stability of the biomolecules as well as the mechanisms for loading of biomolecules within PEG hydrogels will also be discussed. Finally, we overview and provide a perspective on some of the emerging novel design and applications of PEG hydrogel systems, including the spatiotemporal-controlled delivery of biomolecules, hybrid hydrogels, and PEG hydrogels designed for controlled stem cell differentiation.