Nerve guidance channels (NGCs) promote axonal regeneration after transection injury of the peripheral nerve or spinal cord, yet this regeneration is limited. To enhance regeneration further, we hypothesize that localized delivery of therapeutic molecules combined with the NGC is required. In an attempt to achieve such an NGC, we designed and synthesized a novel NGC in which protein-encapsulated microspheres were stably incorporated into the tube wall. Specifically, poly(lactide-co-glycolide) (PLGA 50/50) microspheres were physically entrapped in the annulus between two concentric tubes, consisting of a chitosan inner tube and a chitin outer tube. Taking advantage of the extensive shrinking that the outer chitin tube undergoes with drying, >15 mg of microspheres were loaded within the tube walls. Using BSA-encapsulated microspheres as the model drug delivery system, BSA was released from microsphere loaded tubes (MLTs) for 84 days, and from freely suspended PLGA microspheres for 70 days. An initial burst release was observed for both MLTs and free microspheres, followed by a degradation-controlled release profile that resulted in a higher release rate from MLTs initially, which was then attenuated likely due to the buffering effect of chitin and chitosan tubes. Epidermal growth factor (EGF), co-encapsulated with BSA in PLGA 50/50 microspheres in MLTs, was released for 56 days with a similar profile to that of BSA. Released EGF was found to be bioactive for at least 14 days as assessed by a neurosphere forming bioassay.