The goal of this dissertation is to better understand a mechanism that produces large color changes in a protease responsive nanoparticle hydrogel (PRNH) with structural color. The outcomes of this research can lead in the development of a peptide-based hydrogel optical sensor for the detection of toxic proteases in solution to prevent public exposure by means of water or food source contamination, and a potential terrorist event. Towards this application, a structural color changing SiO2 nanoparticle hydrogel film was made with a 4-arm poly(ethylene glycol) terminated with carboxylic acid norbornene (4PEGN), and a degradable dicysteine peptide. To fabricate the PRNHs, a rapid and tunable centrifugation-based assembly was developed. The color of centrifuged colloids of a single particle diameter was precisely controlled within 50 nm by modulating the particle concentration. The peak wavelength reflected by the material was further tuned by altering the centrifugal rate and assembly time. When placed in a protease solution, the peptide crosslinks degrade causing electrostatic binding and adsorption of the polymer to the particle surface which leads to the assembly of particles into compact amorphous arrays with structural color. Only PRNHs with highly negative particle surface charge exhibit color changes after degradation. Ultra-small angle x-ray scattering revealed that the particles become coated in polymer after degradation, producing a material with less order compared to the initial state. Altering the particle diameter modulates the composites' color, and all sizes investigated (178–297 nm) undergo the degradation-directed assembly. Varying the amount of 4PEGN adjusts the swollen PRNH color and has no effect on the degradation-directed assembly. Next, a botulinum neurotoxin (Botox) responsive nanoparticle hydrogel was developed. Its stability, optical properties, and response time were characterized and optimized for detecting 10 µg/mL of BoTox in solution. Last, a new method to produce bright full-spectrum structurally colored fluids that are non-iridescent is presented. The color was modulated by altering the particle volume fraction and a model predicting the peak wavelength reflected by the colloid was developed. Collectively, this body of work advances the development of responsive structurally colored detection platforms and particle assembly strategies for the production of structural color.