Perfluorocarbons (PFCs) are used in biomaterial formulations to increase oxygen (O2) tension and create a homogeneous O2 environment in three-dimensional tissue constructs. It is unclear how PFCs affect mechanical and transport properties of the scaffold, which are critical for robustness, intracellular signaling, protein transport, and overall device efficacy. In this study, we investigate composite alginate hydrogels containing a perfluorooctyl bromide (PFOB) emulsion stabilized with Pluronic® F68 (F68). We demonstrate that PFC addition significantly affects biomaterial properties and performance. Solution and hydrogel mechanical properties and transport of representative hydrophilic (riboflavin), hydrophobic (methyl and ethyl paraben), and protein (bovine serum albumin, BSA) solutes were compared in alginate/F68 composite hydrogels with or without PFOB. Our results indicate that mechanical properties of the alginate/F68/PFOB hydrogels are not significantly affected under small strains, but a significant decrease fracture stress is observed. The effective diffusivity Deff of hydrophobic small molecules decreases with PFOB emulsion addition, yet the Deff of hydrophilic small molecules remained unaffected. For BSA, the Deff increased and the loading capacity decreased with PFOB emulsion addition. Thus, a trade-off between the desired increased O2 supply provided by PFCs and the mechanical weakening and change in transport of cellular signals must be carefully considered in the design of biomaterials containing PFCs. © 2012 Wiley Periodicals, Inc. J Biomed Mater Res Part A, 2013.