Cell therapies are hampered by a lack of available delivery systems, resulting in inconsistent outcomes in animal studies and human clinical trials. Hydrogel encapsulants offer a broad range of tunable characteristics in the design of cell delivery vehicles. The focus of the hydrogel field has been on durable encapsulants that provide long-term paracrine function of the cells. However, some cell therapies require cell-to-cell contact in order to elicit their effect. Controlled release microencapsulants would be beneficial in these situations, but appropriate polymers have not been adaptable to microsphere manufacturing because they harden too slowly. We developed and tested a novel microencapsulant formulation (acrylated hyaluronic acid: AHA) with degradation characteristics as a controlled release cell delivery vehicle. The properties of AHA microspheres were evaluated and compared to those of poly(ethylene glycol) diacrylate (PEGDA), a durable hydrogel. AHA microspheres possessed a higher swelling ratio, lower diffusion barrier, faster degradation rate, a lower storage modulus, and a larger average diameter than microspheres composed of PEGDA. Additionally, in vitro cell viability and release and short-term in vivo biocompatibility in immune competent Sprague-Dawley rats was assessed for each microsphere type. Compared to PEGDA, microspheres composed of AHA resulted in significantly less foreign body response in vivo as measured by a lack of cellularity or fibrotic ring in the surrounding tissue and no cellular infiltration into the microsphere. This study illustrates the potential of AHA microspheres as a degradable cell delivery system with superior encapsulated cell viability and biocompatibility with the surrounding tissue.