Many prepubertal girls and young women suffer from premature ovarian insufficiency induced by chemotherapy given for treatment of cancer and autoimmune diseases. Autotransplantation of cryopreserved ovarian tissue could restore the lost ovarian endocrine function and fertility. Unfortunately, tissue ischemia, inconsistent graft quality and the risk of reintroducing malignant cells may stand in the way of the clinical translation of this approach. To address these risks and limitations, we engineered an artificial ovarian tissue from immature follicles using a synthetic hydrogel, poly(ethylene glycol) vinyl sulfone (PEG-VS), as a supportive matrix. Enzymatically isolated follicles from 6–7-day-old mice ovaries were encapsulated in 7% PEG-VS hydrogels modified with 0.5 mmol/l RGD and crosslinked with a trifunctional matrix metalloproteinase-sensitive peptide. PEG hydrogels with the encapsulated follicles were orthotopically implanted into ovariectomised mice to investigate whether PEG hydrogel supports folliculogenesis and steroidogenesis in vivo. After 30 days, grafts revealed multiple fully developed antral follicles and corpora lutea, which corresponded with regular ovulation cycles and follicle-stimulating hormone (FSH) levels. The elevated levels of FSH, caused by bilateral ovariectomy, were reversed by the implanted follicles and maintained at physiological levels for 60 days. Importantly, primordial and primary follicles still represented 60% of the follicular pool, demonstrating selective recruitment of primordial follicles into the growing pool. Functioning blood vessels in the grafts 30 and 60 days after implantation proved the capability of PEG hydrogels to undergo graft remodelling and revascularisation. Our results demonstrate that PEG hydrogels with encapsulated immature ovarian follicles successfully functioned as an artificial ovarian tissue for 60 days in vivo.