The tumor microenvironment is a complex and dynamic ecosystem composed of various physical cues and biochemical signals that facilitate cancer progression, and tumor-associated macrophages are especially of interest as a treatable target due to their diverse pro-tumorigenic functions. Engineered three-dimensional models of tumors more effectively mimic the tumor microenvironment than monolayer cultures and can serve as a platform for investigating specific aspects of tumor biology within a controlled setting. To study the combinatorial effects of tumor-associated macrophages and microenvironment mechanical properties on osteosarcoma, we co-cultured human osteosarcoma cells with macrophages within biomaterials-based bone tumor niches with tunable stiffness. In the first 24 h of direct interaction between the two cell types, macrophages induced an inflammatory environment consisting of high concentrations of tumor necrosis factor alpha (TNFα) and interleukin (IL)-6 within moderately stiff scaffolds. Expression of Yes-associated protein (YAP), but not its homolog, transcriptional activator with PDZ-binding motif (TAZ), in osteosarcoma cells was significantly higher than in macrophages, and co-culture of the two cells slightly upregulated YAP in both cells, although not to a significant degree. Resistance to doxorubicin treatment in osteosarcoma cells was correlated with inflammation in the microenvironment, and signal transducer and activator of transcription 3 (STAT3) inhibition diminished the inflammation-related differences in drug resistance but ultimately did not improve the efficacy of doxorubicin. This work highlights that the biochemical cues conferred by tumor-associated macrophages in osteosarcoma are highly variable, and signals derived from the immune system should be considered in the development and testing of novel drugs for cancer.Keywords: IL-6/STAT3; Osteosarcoma; Tissue engineered tumor model; Tumor microenvironment mechanical properties; Tumor-associated macrophages; YAP/TAZ.