Abstract Skeletal muscle plays a vital role in maintaining the body's shape and regulating various physiological processes. Its function is influenced by a multitude of factors. Given the lack of uniformity in prior research regarding the size and placement of structural pillars within the chip, as well as the choice of cell‐laden hydrogel components with various densities of extracellular matrix, in different gelation times, and cell densities, a meticulous investigation is conducted to enhance the robustness of 3D in vitro musculoskeletal tissues. This study provides guidance on how to optimize the design parameters of skeletal muscle‐on‐a‐chip and hydrogel recipe by evaluating the impact of design elements and hydrogel fabrication conditions on tissue formation and musculoskeletal differentiation. This research reports the direct evidence of mechanical properties of hydrogels are critical in influencing cellular differentiation and tissue functionality through the process of mechanotransduction. The study highlights the importance of standardizing experimental conditions in 3D in vitro musculoskeletal research, and presents a validated framework as a foundation to aid in the development of functional musculoskeletal tissue for clinical and research applications, including disease modeling and regenerative therapies.