Astrocytes play a critical role in supporting the normal physiological function of neurons. Recent studies have revealed that astrocyte transplantation can promote axonal regeneration and functional recovery after spinal cord injury. Biomaterial can be designed as a growth-permissive substrate and serve as a carrier for astrocyte transplantation into injured spinal cord. In this study, we developed a method to generate collagen microspheres encapsulating astrocytes by injecting a mixture of collagen and astrocytes into a cell culture medium with a syringe controlled by a syringe pump. The collagen microspheres were cross-linked with poly(ethylene glycol) ether tetrasuccinimidyl glutarate (4S-StarPEG) to reduce the degradation rate. The viability of cells in the cross-linked microspheres was higher than 90%. Astrocytes were transfected with plasmids encoding nerve growth factor (NGF)-ires-enhanced green fluorescent protein (EGFP) genes by electroporation and encapsulated in cross-linked microspheres. The level of NGF released into the cell culture medium was higher than that remaining in the microspheres or astrocytes. When microspheres encapsulating astrocytes transfected with plasmids encoding NGF-ires-EGFP genes were added into the cultured rat dorsal root ganglion, the axonal growth was significantly enhanced. This study shows that the microspheres can be potentially used as a carrier of astrocytes to promote nerve regeneration in injured neural tissue.