Various modifications including addition of Schwann cells or incorporation of growth factors with bioabsorbable nerve conduits have been explored as options for peripheral nerve repair. However, no reports of nerve conduits containing both supportive cells and growth factors have been published as a regenerative therapy for peripheral nerves. In the present study, sciatic nerve gaps in mice were reconstructed in the following groups: nerve conduit alone (control group), nerve conduit coated with induced pluripotent stem cell (iPSc)-derived neurospheres (iPSc group), nerve conduit coated with iPSc-derived neurospheres and basic fibroblast growth factor (bFGF)-incorporated gelatin microspheres (iPSc + bFGF group), and autograft. The fastest functional recovery and the greatest axon regeneration occurred in the autograft group, followed in order by the iPSc + bFGF group, iPSc group, and control group until 12 weeks after reconstruction. Thus, peripheral nerve regeneration using nerve conduits and functional recovery in mice was accelerated by a combination of iPSc-derived neurospheres and a bFGF drug delivery system. The combination of all three fundamental methodologies, iPSc technology for supportive cells, bioabsorbable nerve conduits for scaffolds, and a bFGF drug delivery system for growth factors, was essential for peripheral nerve regenerative therapy. (c) 2013 Wiley Periodicals, Inc. J Biomed Mater Res Part A: 102A: 1370-1378, 2014.