The biophysical heterogeneity of the bone–cartilage interface requires complex materials to mimic differences in bone density, extracellular matrix composition, and mineralization. Biomaterial approaches to repair osteochondral tissue typically use multilayer scaffolds, which require multistep fabrication and may undergo delamination at the construct interface. This work describes the development of functionalized microgels for the repair of osteochondral tissues using an N-cadherin peptide, bone morphogenetic protein-2 (BMP-2) peptide, and changes in stiffness to create pro-osteogenic and prochondrogenic microgels. Microgels, when annealed into a scaffold, outperforms bulk hydrogel controls evidenced by upregulation of osteogenic and chondrogenic markers in mesenchymal stromal cells (MSCs). The macroporous void space present in microgel anneals scaffolds enabled robust cell proliferation and extracellular matrix (ECM) deposition throughout the entire scaffold. A bilayer functionalized annealed microgel scaffold is then created and the ability to spatially control the differentiation of MSCs is assessed. Osteochondral bilayer scaffolds exhibit distinct regions of osteogenic and chondrogenic protein expression as a function of microgel population upon immunostaining for osteocalcin and aggrecan, respectively. Spatial transcriptomics confirm osteogenic and chondrogenic genes are upregulated in their respective microgel regions. These studies highlight the tunable and functionalizable nature of microgels and the importance of macroporous void space.