After traumatic injury to the spinal cord, the neural tissue degenerates, resulting in lost function below the site of injury. Promoting axonal regeneration after injury remains a challenge; however, guidance channels have demonstrated some success when combined with cellular and protein therapies. One of the limitations of current guidance channels is the inability to deliver therapeutically relevant molecules in situ, within the guidance channel, to enhance regeneration. In an effort to provide a system for local and sustained drug release, poly(lactide-co-glycolide) (PLGA) microspheres were embedded into chitosan guidance channels by a novel spin-coating technique. The method was designed to create guidance channels with the appropriate dimensions for implantation into the spinal cord, with special attention paid to the wall thickness. The release and bioactivity of a model protein, alkaline phosphatase, was followed from the channels and compared to those from free-floating microspheres over a 90-day period. Since chitosan formulations often require the use of acidic solutions, careful attention was paid to redesign the process to minimize exposure of PLGA microspheres to acid. This was achieved as demonstrated by release and bioactivity data where alkaline phosphatase released from chitosan/microsphere channels followed a profile and bioactivity similar to those of free floating microspheres.