The pathophysiological response following spinal cord injury (SCI) is characterized by a complex cellular cascade that limits regeneration. Biomaterial and stem cell combination therapies have shown synergistic effects, compared to their interventions independent of each other, and represent a promising approach towards regaining function after injury. In this study, we combine our polyethylene glycol (PEG) cell delivery platform with lentiviral-mediated overexpression of the anti-inflammatory cytokine interleukin (IL)-10 to improve embryonic day 14 (E14) spinal progenitor transplant survival. PEG tubes loaded with lentivirus encoding for IL-10 were implanted immediately following injury into a mouse SCI hemisection model. Two weeks after tube implantation, mouse E14 spinal progenitors were injected directly into the integrated tubes, which served as a soft substrate for cell transplantation. Together, the tubes with the IL-10 encoding lentivirus improved E14 spinal progenitor survival, assessed at two weeks post-transplantation (four weeks post-injury). Mice receiving IL-10 lentivirus-laden tubes had on average 8.1% of E14 spinal progenitors survive compared to 0.7% in mice receiving transplants without tubes, an 11.5-fold difference. Surviving E14 spinal progenitors gave rise to neurons when injected into tubes. Additionally, axon elongation and remyelination was observed, in addition to a faster rate of functional recovery in mice receiving anti-inflammatory tubes with E14 spinal progenitor delivery. This system affords increased control over the transplantation microenvironment, offering the potential to improve stem cell-mediated tissue regeneration.