A thermosensitive hydrogel capable of differentiating mesenchymal stem cells (MSCs) into cardiomyocytel-ike cells was synthesized. The hydrogel was based on N-isopropylacrylamide (NIPAAm), N-acryloxysuccinimide, acrylic acid, and hydroxyethyl methacrylate-poly(trimethylene carbonate). The hydrogel was highly flexible at body temperature with breaking strain >1000% and Young's modulus 45 kPa. When MSCs were encapsulated in the hydrogel and cultured under normal culture conditions (10% FBS and 21% O-2), the cells differentiated into cardiomyocyte-like cells. However, the differentiation was retarded, and even diminished, under low nutrient and low oxygen conditions, which are typical of the infarcted heart. We hypothesized that enhancing MSC survival under low nutrient and low oxygen conditions would restore the differentiation. To enhance cell survival, a pro-survival growth factor (bFGF) was loaded in the hydrogel. bFGF was able to sustainedly release from the hydrogel for 21 days. Under the low nutrient and low oxygen conditions (1% O-2 and 1% FBS), bFGF enhanced MSC survival and differentiation in the hydrogel. After 14 days of culture, survival of 70.5% of MSCs remained in the bFGF-loaded hydrogel, while only 4.9% of MSCs remained in the hydrogel without bFGF. The differentiation toward cardiomyocyte-like cells was completely inhibited at 1% FBS and 1% oxygen. Loading bFGF in the hydrogel restored the differentiation, as confirmed by the expression of cardiac markers at both the gene (MEF2C and CACNA1c) and protein (cTnI and connexin 43) levels. bFGF loading also up-regulated the paracrine effect of MSCs. VEGF expression was significantly increased in the bFGF-loaded hydrogel. These results demonstrate that the developed bFGF-loaded hydrogel may potentially be used to deliver MSCs into hearts for regeneration of heart tissue.