Stem cells have inherent tumor‑trophic migratory properties and can serve as vehicles for delivering effective, targeted therapy to isolated tumors and metastatic disease, making them promising anti‑cancer agents. Encapsulation of therapeutically engineered stem cells in hydrogels has been utilized to provide a physical barrier to protect the cells from hostile extrinsic factors and significantly improve the therapeutic efficacy of transplanted stem cells in different models of cancer. This review aims to discuss the potential of different stem cell types for cancer therapy, various engineered stem cell based therapies for cancer, stem cell encapsulation process and provide an in depth overview of current applications of therapeutic stem cell encapsulation in the highly malignant brain tumor, glioblastoma multiforme (GBM), as well as the prospects for their clinical translation.