Local delivery of drugs offers the potential for high local drug concentration while minimizing systemic toxicity, which is often observed with oral dosing. However, local depots are typically administered less frequently and include an initial burst followed by a continuous release. To maximize efficiency of therapy, it is critical to ensure that drug is only released when needed. One of the hallmarks of rheumatoid arthritis, for example, is its variable disease activity consisting of exacerbations of inflammation punctuated by periods of remission. This presents significant challenges for matching localized drug delivery with disease activity. An optimal system would be nontoxic and only release drugs during the period of exacerbation, self-titrating in response to the level of inflammation. We report the development of an injectable self-assembled nanofibrous hydrogel, from a generally recognized as safe material, which is capable of encapsulation and release of agents in response to specific enzymes that are significantly upregulated in a diseased state including matrix metalloproteinases (MMP-2 and MMP-9) and esterases. We show that these self-assembled nanofibrous gels can withstand shear forces that may be experienced in dynamic environments such as joints, can remain stable following injection into healthy joints of mice, and can disassemble in vitro to release encapsulated agents in response to synovial fluid from arthritic patients. This novel approach represents a next-generation therapeutic strategy for localized treatment of proteolytic diseases.