Peripheral nerve injury is a debilitating condition for which new bioengineering solutions are needed. Autografting, the gold standard in treatment, involves sacrifice of a healthy nerve and results in loss of sensation or function at the donor site. One alternative solution to autografting is to use a nerve guide conduit designed to physically guide the nerve as it regenerates across the injury gap. Such conduits are effective for short gap injuries, but fail to surpass autografting in long gap injuries. One strategy to enhance regeneration inside conduits in long gap injuries is to fill the guide conduits with a hydrogel to mimic the native extracellular matrix found in peripheral nerves. In this work, a peptide amphiphile (PA)-based hydrogel was optimized for peripheral nerve repair. Hydrogels consisting of the PA C16GSH were compared with a commercially available collagen gel. Schwann cells, a cell type important in the peripheral nerve regenerative cascade, were able to spread, proliferate, and migrate better on C16GSH gels in vitro when compared with cells seeded on collagen gels. Moreover, C16GSH gels were implanted subcutaneously in a murine model and were found to be biocompatible, degrade over time, and support angiogenesis without causing inflammation or a foreign body immune response. Taken together, these results help optimize and instruct the development of a new synthetic hydrogel as a luminal filler for conduit-mediated peripheral nerve repair.