Human-induced pluripotent stem cell-derived vascular smooth muscle cells (hiPSC-VSMCs) with proangiogenic properties have huge therapeutic potential. While hiPSC-VSMCs have already been utilized for wound healing using a biomimetic collagen scaffold, an in situ forming hydrogel mimicking the native environment of skin offers the promise of hiPSC-VSMC mediated repair and regeneration. Herein, the impact of a collagen type-I-hyaluronic acid (HA) in situ hydrogel cross-linked using a polyethylene glycol-based cross-linker on hiPSC-VSMCs viability and proangiogenic paracrine secretion was investigated. Our study demonstrated increases in cell viability, maintenance of phenotype and proangiogenic growth factor secretion, and proangiogenic activity in response to the conditioned medium. The optimally cross-linked and functionalized collagen type-I/HA hydrogel system developed in this study shows promise as an in situ hiPSC-VSMC carrier system for wound regeneration.