Photoencapsulation of protein therapeutics is very attractive for preparing biomolecule-loaded hydrogels for a variety of biomedical applications. However, detrimental effects of highly active radical species generated during photoencapsulation must be carefully evaluated to maintain efficient hydrogel cross-linking while preserving the structure and bioactivity of encapsulated biomolecules. Here, we examine the free-radical-mediated inactivation and incomplete release of proteins from photocurable hydrogels utilizing lysozyme as a conservative model system. Various protein photoencapsulation conditions were tested to determine the factors affecting lysozyme structural integrity and bioactivity. It was found that a portion of the lysozyme becomes conjugated to polymer chains at high photoinitiator concentrations and long polymerization times. We also found that the more hydrophilic photoinitiator Irgacure-2959 (I-2959, 2-hydroxy-1-[4-(hydroxyethoxy)phenyl]-2-methyl-1-propanone) causes more damage to lysozyme compared to the hydrophobic photoinitiator Irgacure-651 (I-651, 2,2-dimethoxy-2-phenylacetophenone), even though I-2959 has been previously shown to be more cytocompatible. Furthermore, while nonacrylated PEG provides only limited protection from the denaturing free radicals that are present during hydrogel curing, acrylated PEG macromers effectively preserve lysozyme structural integrity and bioactivity in the presence of either photoinitiator. Overall, these findings indicate how photopolymerization conditions (e.g., photoinitiator type and concentration, UV exposure time, etc.) must be optimized to obtain a functional hydrogel device that can preserve protein bioactivity and provide maximal protein release.