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Endothelial progenitor cells and human mesenchymal stem cells (hMSCs) haveshown great regenerative potential to repair damaged tissue; however, their injection in vivo results in low retention and poor cell survival. Early clinical research has focussed on cell encapsulation to improve viability and integration of delivered cells. However, this strategy has been limited by the inability to reproduce large volumes of standardized microcapsules and the lack of information on cell-specific egress and timed release from hydrogel microcapsules. Here, we address both of these limitations. First, we use a droplet microfluidic platform to generate monodisperse agarose microcapsules, and second we encapsulate and characterize egress of therapeutically relevant cells (human umbilical vein endothelial cells, endothelial progenitor cells, and hMSCs). With increased temporal resolution, we demonstrate distinct differences in egress between cell types. Importantly, therapeutic cells (hMSCs) egress quickly, in <6 hr following encapsulation. Further, we examined potential escape mechanisms and showed that proliferation can be exploited by cells for microcapsule translocation. We also systematically characterized the egress of fibroblasts (as model cells) following alterations to the microcapsules. Specifically, we show that microcapsule size and hydrogel density impact cell egress efficiency.Overall, our results demonstrate the need for characterization of cell-specific egress and tuning of the cocoon microenvironment prior to delivery, for timely release and successful engraftment.