Cell therapies harnessing the pro-vascular regenerative capacities of mesenchymal stromal cell (MSC) populations, including human adipose-derived stromal cells (hASCs), have generated considerable interest as an emerging treatment strategy for peripheral arterial disease (PAD) and its progression to critical limb ischemia (CLI). There is evidence to support that polysaccharide hydrogels can enhance therapeutic efficacy when applied as minimally-invasive delivery systems to support MSC survival and retention within ischemic tissues. However, there has been limited research to date on the effects of hydrogel composition on the phenotype and function of encapsulated cell populations. Recognizing this knowledge gap, this study compared the pro-angiogenic function of hASCs encapsulated in distinct but similarly-modified natural polysaccharide hydrogels composed of methacrylated glycol chitosan (MGC) and methacrylated hyaluronic acid (MHA). Initial in vitro studies confirmed high viability (>85%) of the hASCs following encapsulation and culture in the MGC and MHA hydrogels over 14 days, with a decrease in the cell density observed over time. Moreover, higher levels of a variety of secreted pro-angiogenic and immunomodulatory factors were detected in conditioned media samples collected from the hASCs encapsulated in the MGC-based hydrogels compared to the MHA hydrogels. Subsequent testing focused on comparing hASC delivery within the MGC and MHA hydrogels to saline controls in a femoral artery ligation-induced CLI (FAL-CLI) model in athymic nu/nu mice over 28 days. For the in vivo studies, the hASCs were engineered to express tdTomato and firefly luciferase to quantitatively compare the efficacy of the two platforms in supporting the localized retention of viable ASCs through longitudinal cell tracking with bioluminescence imaging (BLI). Interestingly, hASC retention was significantly enhanced when the cells were delivered in the MHA hydrogels as compared to the MGC hydrogels or saline. However, laser Doppler perfusion imaging (LDPI) indicated that the restoration of hindlimb perfusion was similar between the treatment groups and controls. These findings were corroborated by endpoint immunofluorescence (IF) staining showing similar levels of CD31+ cells in the ligated limbs at 28 days in all groups. Overall, this study demonstrates that enhanced MSC retention may be insufficient to augment vascular regeneration, emphasizing the complexity of designing biomaterials platforms for MSC delivery for therapeutic angiogenesis. In addition, the data points to a potential challenge in approaches that seek to harness the paracrine functionality of MSCs, as strategies that increase the secretion of immunomodulatory factors that can aid in regeneration may also lead to more rapid MSC clearance in vivo.