The host immune system is known to influence mesenchymal stem cell (MSC)-mediated bone tissue regeneration. However, the therapeutic capacity of hydrogel biomaterial to modulate the interplay between MSCs and T-lymphocytes is unknown. Here it is shown that encapsulating hydrogel affects this interplay when used to encapsulate MSCs for implantation by hindering the penetration of pro-inflammatory cells and/or cytokines, leading to improved viability of the encapsulated MSCs. This combats the effects of the host pro-inflammatory T-lymphocyte-induced nuclear factor kappaB pathway, which can reduce MSC viability through the CASPASE-3 and CAS-PASE-8 associated proapoptotic cascade, resulting in the apoptosis of MSCs. To corroborate rescue of engrafted MSCs from the insult of the host immune system, the incorporation of the anti-inflammatory drug indomethacin into the encapsulating alginate hydrogel further regulates the local microenvironment and prevents pro-inflammatory cytokine-induced apoptosis. These findings suggest that the encapsulating hydrogel can regulate the MSC-host immune cell interplay and direct the fate of the implanted MSCs, leading to enhanced tissue regeneration
