This thesis aims to develop and understand the role of peptide modified collagen scaffolds in tissue engineering and stem cell differentiation. The extracellular matrix and microenvironment surrounding cells plays a critical role in controlling phenotypic and genotypic behavior of cells. It is important to elucidate this role in stem cell differentiation to develop regenerative therapies. Here in, we developed a method to alter, positively and negatively, the adhesion migration and reorganization of scaffolds by fibroblast and smooth muscle cells on and in collagen. By grafting an adhesive peptide ‘RGD’ and a scramble non-adhesive peptide ‘RDG’ to collagen we were able to modulate in a dose dependent manner the adhesion of cells to collagen and establish the bimodal dependence of migration on adhesion in and on collagen scaffolds. We then extended this approach to understand the role of cell adhesion on differentiation of stem cells; we assayed the differentiation of sox-1 reporting murine embryonic stem cells on these scaffolds. Sox-1 expression was found to be inversely related to cell-matrix adhesion. Sox-1 reporting stem cells cultured on RDG grafted collagen scaffolds had a significantly greater population of cells that were sox-1 positive relative to controls. However, the difference between conditions was at most 10%. To further evaluate the ability of matrix cues to guide the differentiation of stem cells we grafted peptide mimics of neural stem cell niche carbohydrates, human natural killer-1 and polysialic acid to collagen and assayed the differentiation of stem cells towards cell types from all three germ layers. Cells cultured on human natural killer-1 and polysialic acid grafted collagen preferentially differentiated towards neuroectoderm lineage cells as indicated by qPCR and Immunohistochemistry. Identifying matrix cues and environments that support and direct the differentiation of stem cell is essential for regenerative medicine. Scaffolds that support and direct the differentiation of stem cells may eventually be used as therapies for degenerative diseases.