Poly(vinyl alcohol) hydrogels have a long and successful history of applications in biomedicine. Historically, these matrices were developed to be nondegradable limiting their utility to applications as permanent implants. For tissue engineering and drug delivery, herein we develop spontaneously eroding physical hydrogels based on PVA. We characterize in detail a mild, noncryogenic method of producing PVA physical hydrogels using poly(ethylene glycol) as a gelating agent, and investigate PVA molar mass as a means to define the kinetics of erosion of these biomaterials. PVA hydrogels are characterized for associated inflammatory response in adhering macrophages, antiproliferative effects mediated through delivery of cytotoxic drugs to myoblasts, and pro-proliferative activity achieved via presentation of conjugated growth factors to endothelial cells. Together, these data present a multiangle characterization of these novel multifunctional matrices for applications in tissue engineering and drug delivery mediated by implantable biomaterials.