Vascularization was measured at the end of 9 weeks via Microfil-enhanced imaging, and local inflammatory response/progenitor cell recruitment was evaluated with immunohistochemistry. Recent reports of complications such as graft failure, infections and unwanted bone formation after BMP-2 usage highlights the need for alternative therapies. The development of strategies that harness the recruitment of endogenous bone progenitor cells and enhance defect site vascularization may be effective at augmenting the local effects of osteoinductive molecules such as BMP-2. Our lab has previously shown that local delivery of FTY720 promotes local arteriogenesis and allograft integration in a rat cranial defect model. Additionally, we have shown that FTY720 release from hard tissue scaffolds enhances osseous integration, Kinase Inhibitor Library clinical trial accelerates vascularization across the host-graft interface, resolves chronic inflammation, and directs anti-inflammatory cell recruitment. In this study, we explore a biomaterial-based delivery platform of FTY720 for modulation of a host of processes critical in bone repair, including inflammatory response, vascularization, and recruitment of endogenous bone progenitor cells. While our material of choice, chitosan, has been used for various tissue-engineering applications such as healing of myocardial infarcts, bone regeneration and cartilage renewal, recent studies have shown that chitosan as a scaffold can enhance mineralization during osteoblast differentiation. Although chitosan alone does not result in substantial defect healing, use of such an injectable biomaterial is clinically relevant for craniofacial surgery where using an injectable therapeutic platforms can be beneficial due to ease of application. As FTY720 is a hydrophobic drug, it is ideal for incorporation into hydrophobic PLAGA microspheres in order to achieve sustained delivery. Though release kinetics of FTY720 from such microcarriers differs from pure diffusion out of a gel, we have shown in prior studies that the microsphere/microgel formulation positively impacts the pattern of bone growth. Due to the fact that microspheres made of PLAGA swell and lose their architecture relatively quickly when delivered on their own in vivo, suspension of these microcarriers within chitosan imparts sustained release kinetics of FTY720 over 4 weeks. Stephan et al. previously showed that delivery of mesenchymal stem cells along with BMP-2 in an injectable scaffold increases bone formation over either therapeutic alone.