A novel technique was developed to regulate the bulk water content of silk hydrogels by adjusting the concentrations of silk proteins, which is helpful to investigate the effects of the state of water in polymeric hydrogel on its biological functions, such as cytotoxicity. Gelation of the silk hydrogel was induced with ethanol and its gelation behavior was analyzed by rheometry. The silk hydrogels prepared at various silk concentrations were characterized with respect to their water content, molecular and network structures, state of water, mechanical properties, and cytotoxicity to human mesenchymal stem cells. The network structure of silk hydrogel was heterogeneous with β-sheet and fibrillar structures. The influence of the state of water in the silk hydrogel on the cytotoxicity was recognized by means of differential scanning calorimetry and cell proliferation assay, which revealed that the bound water will support cell-adhesion proteins in the cellular matrix to interact with the surface of the silk hydrogels.