Biomaterial-mediated controlled release of soluble signaling molecules is a tissue engineering approach to spatially control processes of inflammation, microvascular remodeling, and host cell recruitment and to generate biochemical gradients in vivo. Lipid mediators, such as sphingosine 1-phosphate (S1P), are recognized for their essential roles in spatial guidance, signaling, and highly regulated endogenous gradients. S1P and pharmacological analogs such as FTY720 are therapeutically attractive targets for their critical roles in the trafficking of cells between blood and tissue spaces both physiologically and pathophysiologically. However, the interaction of locally delivered sphingolipids with the complex metabolic networks controlling the flux of lipid species in inflamed tissue has yet to be elucidated. In this study, complementary in vitro and in vivo approaches are investigated to identify relationships between polymer composition, drug release kinetics, S1P metabolic activity, signaling gradients, and spatial positioning of circulating cells around poly lactic-co-glycolic acid (PLGA) biomaterials. Results demonstrate that biomaterial-based gradients of S1P are short-lived in the tissue due to degradation by S1P lyase, an enzyme that irreversibly degrades intracellular S1P. On the other hand, in vivo gradients of the more stable compound, FTY720 enhance microvascular remodeling by selectively recruiting an anti-inflammatory subset of monocytes (S1P3high) to the biomaterial. Results highlight the need to better understand the endogenous balance of lipid import/export machinery and lipid kinase/phosphatase activity in order to design biomaterial products that spatially control the innate immune environment to maximize regenerative potential.