The mechanical properties of the extracellular matrix (ECM)-a complex, 3D, fibrillar scaffold of cells in physiological environments-modulate cell behavior and can drive tissue morphogenesis, regeneration, and disease progression. For simplicity, it is often convenient to assume these properties to be time-invariant. In living systems, however, cells dynamically remodel the ECM and create time-dependent local microenvironments. Here, we show how cell-generated contractile forces produce substantial irreversible changes to the density and architecture of physiologically relevant ECMs-collagen I and fibrin-in a matter of minutes. We measure the 3D deformation profiles of the ECM surrounding cancer and endothelial cells during stages when force generation is active or inactive. We further correlate these ECM measurements to both discrete fiber simulations that incorporate fiber crosslink unbinding kinetics and continuum-scale simulations that account for viscoplastic and damage features. Our findings further confirm that plasticity, as a mechanical law to capture remodeling in these networks, is fundamentally tied to material damage via force-driven unbinding of fiber crosslinks. These results characterize in a multiscale manner the dynamic nature of the mechanical environment of physiologically mimicking cell-in-gel systems. Author summary Many cells in the body are surrounded by a 3D extracellular matrix of interconnected protein fibers. The density and architecture of this protein fiber network can play important roles in controlling cell behavior. Deregulated biophysical properties of the extracellular environment are observed in diseases such as cancer. We demonstrate, through an integrated computational and experimental study, that cell-generated dynamic local forces rapidly and mechanically remodel the matrix, creating a non-homogeneous, densified region around the cell. This substantially increases extracellular matrix protein concentration in the vicinity of cells and alters matrix mechanical properties over time, creating a new microenvironment. Cells are known to respond to both biochemical and biomechanical properties of their surroundings. Our findings show that for mechanically active cells that exert dynamic forces onto the extracellular matrix, the physical properties of the surrounding environment that they sense are dynamic, and these dynamic properties should be taken into consideration in studies involving cell-matrix interactions, such as 3D traction force microscopy experiments in physiologically relevant environments.