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Abstract Delivery of therapeutic stem cells to treat bone tissue damage is a promising strategy that faces many hurdles to clinical translation. Among them is the design of a delivery vehicle which promotes desired cell behavior for new bone formation. In this work, we describe the use of an injectable microporous hydrogel, made of crosslinked gelatin microgels, for the encapsulation and delivery of human mesenchymal stem cells (MSCs) and compared it to a traditional nonporous injectable hydrogel. MSCs encapsulated in the microporous hydrogel showed rapid cell spreading with direct cell–cell connections whereas the MSCs in the nonporous hydrogel were entrapped by the surrounding polymer mesh and isolated from each other. On a per-cell basis, encapsulation in microporous hydrogel induced a 4 × increase in alkaline phosphatase (ALP) activity and calcium mineral deposition in comparison to nonporous hydrogel, as measured by ALP and calcium assays, which indicates more robust osteogenic differentiation. RNA-seq confirmed the upregulation of the genes and pathways that are associated with cell spreading and cell–cell connections, as well as the osteogenesis in the microporous hydrogel. These results demonstrate that microgel-based injectable hydrogels can be useful tools for therapeutic cell delivery for bone tissue repair.