The release kinetics for a variety of proteins of a wide range of molecular mass, hydrodynamic radii, and isoelectric points through a nanofiber hydrogel scaffold consisting of designer self-assembling peptides were studied by using single-molecule fluorescence correlation spectroscopy (FCS). In contrast to classical diffusion experiments, the single-molecule approach allowed for the direct determination of diffusion coefficients for lysozyme, trypsin inhibitor, BSA, and IgG both inside the hydrogel and after being released into the solution. The results of the FCS analyses and the calculated pristine in-gel diffusion coefficients were compared with the values obtained from the Stokes–Einstein equation, Fickian diffusion models, and the literature. The release kinetics suggested that protein diffusion through nanofiber hydrogels depended primarily on the size of the protein. Protein diffusivities decreased, with increasing hydrogel nanofiber density providing a means of controlling the release kinetics. Secondary and tertiary structure analyses and biological assays of the released proteins showed that encapsulation and release did not affect the protein conformation and functionality. Our results show that this biocompatible and injectable designer self-assembling peptide hydrogel system may be useful as a carrier for therapeutic proteins for sustained release applications.