Mesenchymal stromal cell (MSC) therapies have become potential treatment options for multiple ailments and traumatic injuries. In the clinical setting, MSC are likely to be co-administered with local anesthetics (LA) which have been shown to have dose- and potency-dependent detrimental effects on the viability and function of cells. We previously developed and characterized a sustained-release LA delivery formulation comprised of alginate-encapsulated liposomal bupivacaine. The current studies were designed to evaluate the effect of this formulation on the secretion of three key MSC regulatory molecules, interleukin 6 (IL-6), prostaglandin E2 (PGE2), and transforming growth factor-beta 1 (TGF-β1). MSCs were treated with several bupivacaine formulations—bolus, liposome, or alginate-liposome construct (engineered construct)—in the presence or absence of inflammatory stimulus to stimulate an injured tissue environment. Our results indicated that compared to bolus or liposomal bupivacaine, the engineered construct preserved or promoted MSC anti-inflammatory PGE2 secretion; however, the engineered construct did not increase TGF-β1 secretion. Bupivacaine release profile analyses indicated that mode of drug delivery controlled the LA concentration over time and pathway analysis identified several shared and cytokine-specific molecular mediators for IL-6, PGE2, and TGF-β1 which could explain differential MSC secretion responses in the presence of bupivacaine. Collectively, these studies support the potential utility of alginate-encapsulated LA constructs for anti-inflammatory cell therapy co-administration and indicate that mode of local anesthetic delivery can significantly alter MSC secretome function.