Controlled expression of glial cell line derived neurotrophic factor (GDNF) can be integrated in the development of a system for repair of injured peripheral nerves. This delivery strategy was demonstrated via inducible GDNF from microencapsulated cells in barium alginate. The Schwann cell line RT4-D6P2T was initially modified utilizing an ecdysone-based stable transfection system to produce RT4-GDNF cells. During construct preparation, it was found that C6 cells (where GDNF cDNA was isolated) make three GDNF transcript variants. Additionally, the importance of 5' untranslated region to drive biologically-functional GDNF synthesis was shown. Encapsulation of RT4-GDNF in 1% alginate was then performed. It was determined that cells were able to survive at least 1 month in vitro using starting densities of 20, 200 and 2000 cells/capsule and in a barium ion concentration of 50 mM. Most importantly, our results demonstrate that encapsulated Schwann cells continuously secreted exogenous GDNF at all time points and increased GDNF secretion upon ponasterone A induction. Compressive stress values were determined in our testing to be above 50 kilopascals of force. Finally, permeability results with FITC-Dextran strongly suggest that microcapsules conformed from 50 mM BaCl2- alginate gelling solution is a useful vehicle for controlled release of GDNF delivery. Thus, we expect this encapsulation system can be utilized for optimizing the release of GDNF for improved nerve regeneration and regulated GDNF release from these microcapsules in vivo may potentially aid in the regeneration of damaged nerves.