Endothelial progenitor cells (EPCs) in the circulatory system have been suggested to maintain vascular homeostasis and contribute to adult vascular regeneration and repair. These processes require that EPCs break down the extracellular matrix (ECM), migrate, differentiate and undergo tube morphogenesis. Evidently, the ECM plays a critical role by providing biochemical and biophysical cues that regulate cellular behaviour. Using a chemically and mechanically tunable hydrogel to study tube morphogenesis in vitro, we show that vascular endothelial growth factor (VEGF) and substrate mechanics co-regulate tubulogenesis of EPCs. High levels of VEGF are required to initiate tube morphogenesis and activate matrix metalloproteinases (MMPs), which enable EPC migration. Under these conditions, the elasticity of the substrate affects the progression of tube morphogenesis. With decreases in substrate stiffness, we observe decreased MMP expression while increased cellular elongation, with intracellular vacuole extension and coalescence to open lumen compartments. RNAi studies demonstrate that membrane type 1-MMP (MT1-MMP) is required to enable the movement of EPCs on the matrix and that EPCs sense matrix stiffness through signalling cascades leading to the activation of the RhoGTPase Cdc42. Collectively, these results suggest that coupled responses for VEGF stimulation and modulation of substrate stiffness are required to regulate tube morphogenesis of EPCs.