Tissue engineering and stem cell therapy hold great potential of being able to fully restore, repair and replace damaged, diseased or lost tissues in the body. Biocompatible porous scaffolds are used for the delivery of cells to the regeneration sites. Marrow stromal cells (MSCs), also referred to as mesenchymal stem cells, are an attractive cell source for tissue engineering, due to the relative ease of isolation and the ability of in vitro expanded MSCs to generate multiple cell types, including osteoblasts, chondrocytes and adipocytes. This study utilized a novel technique called microwave vacuum drying to fabricate porous gelatin-alginate scaffolds for the delivery of MSCs and investigated the differential in vitro and in vivo responses of MSCs seeded on these scaffolds. Scaffold total porosity was found to decrease with increased cross-link density but the pore size and pore size distribution were not affected. Although highly porous, the scaffold had relatively small pores and limited interconnectivity. The porous gelatin-alginate scaffold demonstrated excellent biocompatibility with neovascularization on the surfaces and was bioresorbed completely in vivo, depending upon the cross-link density. MSCs were able to attach and proliferate at the same rate on the scaffolds, and the self-renewal potential of MSC cultures was similar during both in vitro culture and in vivo implantation. However, the subcutaneous microenvironment was found to suppress MSC differentiation along the osteogenic, chondrogenic and adipogenic lineages compared to in vitro conditions, highlighting the differential responses of MSCs cultured in vitro compared to implantation in vivo.