Epithelial cells cultured within collagen and laminin gels proliferate to form hollow and polarized spherical structures, recapitulating the formation of a rudimentary epithelial organ. However, the contributions of extracellular matrix (ECM) biochemical and biophysical properties to morphogenesis are poorly understood because of uncontrolled presentation of multiple adhesive ligands, limited control over mechanical properties, and lot-to-lot compositional variability in these natural ECMs. We engineered synthetic ECM-mimetic hydrogels with independent control over adhesive ligand density, mechanical properties, and proteolytic degradation to study the impact of ECM properties on epithelial morphogenesis. Normal cyst growth, polarization, and lumen formation were restricted to a narrow range of ECM elasticity, whereas abnormal morphogenesis was observed at lower and higher elastic moduli. Adhesive ligand density dramatically regulated apicobasal polarity and lumenogenesis independently of cell proliferation. Finally, a threshold level of ECM protease degradability was required for apicobasal polarity and lumen formation. This synthetic ECM technology provides new insights into how cells transduce ECM properties into complex morphogenetic behaviors.