Traumatic brain injury (TBI) triggers multiple biochemical and cellular processes that exacerbate brain tissue damage through a secondary injury. Therapies that prevent or limit the evolution of secondary injury could significantly reduce the neurological deficits associated with TBI. Mesenchymal stem cell (MSC) transplantation after TBI can ameliorate neurological deficits by modulating inflammation and enhancing the expression of neurotrophic factors. However, transplanted MSCs can be actively rejected by host immune responses, such as those mediated by cytotoxic CD8 T cells, thereby limiting their therapeutic efficacy. Here, we designed an agarose hydrogel that releases Fas ligand (FasL), a protein that can induce apoptosis of cytotoxic CD8 T cells. We studied the immunosuppressive effect of this hydrogel near the allogeneic MSC transplantation site and its impact on the survival of transplanted MSCs in the injured brain. Agarose-FasL hydrogels locally reduced the host cytotoxic CD8 T cell population and enhanced the survival of allogeneic MSCs transplanted near the injury site. Furthermore, the expression of crucial neurotrophic factors was elevated in the injury penumbra, suggesting an enhanced therapeutic effect of MSCs. These results suggest that the development of immunosuppressive hydrogels for stem cell delivery can enhance the benefits of stem cell therapy for TBI.Copyright © 2020 Elsevier Ltd. All rights reserved.