In response to pathogens and trauma, host immune cells interact bi-directionally with their local environment to receive and deposit molecular signals, which orchestrate cellular activation, proliferation, differentiation, and function to maintain healthy tissue homeostasis. While our immune system functions as a vigilant safeguard against environmental threats, instances of immune dysregulation may occur, leading to uncontrolled responses. In these conditions, it is essential to restore balance to the body through modulation of the immune system and the ECM. Cell-based therapeutics have significant potential in locally monitoring and treating inflammatory diseases, however, their widespread use is hindered by recognition and elimination by the host. Thus, novel technologies that can improve the viability and function of cell-based therapies have significant potential in improving translation. Here, we aim to utilize biomaterial encapsulation as a tool for improving the delivery of cell-based therapeutics for local immunomodulation in various inflammatory diseases including myocardial infarct, acute respiratory distress syndrome, neural inflammation, inflammatory bowel disease.