Cavitation rheology is a new characterization technique for the measurement of mechanical properties on small length scales, e.g. 10 -100 µm, at any arbitrary location within a soft material. The technique involves growing a cavity at the tip of a syringe needle and monitoring the pressure of the cavity at the onset of instability. This critical pressure is directly related to the local modulus of the material. We used this technique to characterize the network mechanics of polyacrylamide hydrogel materials, a common material used in many biological applications. Mechanical properties were characterized for the gels with different dimensions and different moduli, which were obtained by varying initial monomer to water ratio. With the increase of monomer concentration, a transition from cavitation to fracture was observed and the results indicate that the critical pressure for fracture initiation also scales with the elastic modulus of a gel. These results provide a quantitative foundation for the extension of this technique to in vivo characterization of biological tissues.