We apply fast relaxation imaging (FReI) as a novel technique for investigating the folding stability and dynamics of proteins within polyacrylamide hydrogels, which have diverse and widespread uses in biotechnology. FReI detects protein unfolding in situ by imaging changes in fluorescence resonance energy transfer (FRET) after temperature jump perturbations. Unlike bulk measurements, diffraction-limited epifluorescence imaging combined with fast temperature perturbations reveals the impact of local environment effects on protein-biomaterial compatibility. Our experiments investigated a crowding sensor protein (CrH2) and phosphoglycerate kinase (PGK), which undergoes cooperative unfolding. The crowding sensor quantifies the confinement effect of the cross-linked hydrogel: the 4% polyacrylamide hydrogel is similar to aqueous solution (no confinement), while the 10% hydrogel is strongly confining. FRAP measurements and protein concentration gradients in the 4% and 10% hydrogels further support this observation. PGK reveals that noncovalent interactions of the protein with the polymer surface are more important than confinement for determining protein properties in the gel: the mere presence of hydrogel increases protein stability, speeds up folding relaxation, and promotes irreversible binding to the polymer even at the solution-gel interface, whereas the difference between the 4% and the 10% hydrogels is negligible despite their large difference in confinement. The imaging capabilities of FReI, demonstrated to be diffraction limited, further revealed spatially homogeneous protein unfolding across the hydrogels at 500 nm length scales and revealed differences in protein properties at the gel-solution boundary.