DescriptionSpinal cord injury affects a significant portion of the population and unfortunately, current clinical therapeutic options are limited. The progression of SCI pathology is driven by several cellular and molecular post injury events which culminate in an inhibitory scar. Mesenchymal stromal/stem cells (MSC) robustly produce paracrine factors which successfully attenuate tissue damage and therefore represent a promising cellular SCI therapy. However, current transplantation modalities do not provide control or ensure long term persistence of the cells. To circumvent these limitations, we investigated the efficacy of alginate microencapsulation in developing an implantable vehicle for MSC delivery. We demonstrate that MSCs remain viable after electrostatic encapsulation with alginate and retain paracrine function. Encapsulated MSCs (eMSCs) promote immunomodulatory macrophage action and prevent degradation of hippocampal tissue in an organotypic model of secondary injury. Pre-clinical animal studies demonstrate the feasibility of transplanting eMSC via lumbar puncture (LP). Capsules localize within the intrathecal space for at least 6 weeks after transplantation, without any observable degradation. Free MSC (fMSC) transplants were not detectable 1 week after transplantation, while eMSC persisted for at least 2 weeks after injury. eMSC transplantation led to marked improvements in white matter sparing and locomotor function. Overall, these observations support the inclusion of eMSC for post-SCI therapy. Syringomyelia after SCI can be attributed, in part, to a non-resolving inflammatory presence at the injury site. The Stromal cell represents a key cellular regulator of immune specific functions. Therefore studies were designed to evaluate the regulatory action of MSCs on macrophages during inflammation. MSC secretion of PGE2 promoted macrophage reprogramming by attenuating pro-inflammatory M1 cytokine secretion and enhancing expression of M2 CD206. PGE2 reprogramming was mediated through the EP4 receptor and CREB signaling indirectly, via GSK3-α inhibition. Lastly, MSCs led to a marked increase in CD206 expressing cells at the injury site 1 week after transplantation. The data here support the role of stromal derived PGE2 in facilitating macrophage reprogramming and establishes GSK3-CREB interactions as a possible regulatory checkpoint in macrophage reprogramming. In conclusion, MSC regulation of immune cell plasticity may be responsible, in part, for their efficacy observed post-SCI transplantation.