The widespread clinical application of collagen sponge-delivered recombinant human bone morphogenetic protein-2 (rhBMP-2) for spinal fusion currently remains limited. This limitation is due to potential adverse events associated with the rapid release of excessively high doses. This study aimed to investigate the impact of varying PGmatrix 3D Shape peptide hydrogel (PepGel) formulations on the release kinetics of rhBMP-2 in vitro. Three PepGel formulations were assessed: 1) 50% v/v PepGel, where solution A (crosslinking reagent) was mixed with solution B (synthetic peptides) and rhBMP-2 solution, making a 50% v/v (solution B volume/total volume) PepGel; 2) 67% v/v PepGel; 3) 80% v/v PepGel. Each sample was loaded with 12 µg of rhBMP-2 and incubated in PBS. The incubation solution containing released rhBMP-2 was collected at 1 hour, 6 hours, and 1, 2, 4, 7, 10, 14, and 21 days, and released rhBMP-2 was quantified using a BMP-2 ELISA kit. To explore how PepGel formulations influence rhBMP-2 release, the gel porosities, swelling ratios, and mechanical properties of the three PepGel formulations were quantitatively analyzed. The results showed that rhBMP-2 encapsulated with 50% v/v PepGel exhibited a sustained release over the 21-day experiment. Between days 7 and 21, the 50% v/v PepGel demonstrated significantly higher rhBMP-2 release rates compared to the 67% and 80% v/v formulations. Higher histological porosity of PepGel was significantly correlated with increased rhBMP-2 release rates. Conversely, the swelling ratio and elastic modulus at 1.0 Hz of the 50% v/v PepGel was significantly lower than that of the 67% and 80% v/v formulations. In conclusion, this study indicates that varying the formulation of crosslinked PepGel can control rhBMP-2 release rates in vitro by modulating gel porosity, swelling ratio, and mechanical properties. Encapsulation with 50% v/v PepGel offers a sustained rhBMP-2 release pattern, which could mitigate the adverse effects associated with burst release of rhBMP-2 if replicated in vivo.