Therapeutically engineered stem cells have shown promise for glioblastoma multiforme (GBM) therapy; however, key preclinical studies are urgently needed for their clinical translation. In this study, we investigated a new approach to GBM treatment using therapeutic stem cells encapsulated in biodegradable, synthetic extracellular matrix (sECM) in mouse models of human GBM resection. Using multimodal imaging, we first showed quantitative surgical debulking of human GBM tumors in mice, which resulted in increased survival. Next, sECM encapsulation of engineered stem cells increased their retention in the tumor resection cavity, permitted tumor-selective migration and release of diagnostic and therapeutic proteins in vivo. Simulating the clinical scenario of GBM treatment, the release of tumor-selective S-TRAIL (secretable tumor necrosis factor apoptosis inducing ligand) from sECM-encapsulated stem cells in the resection cavity eradicated residual tumor cells by inducing caspase-mediated apoptosis, delayed tumor regrowth and significantly increased survival of mice. This study demonstrates the efficacy of encapsulated therapeutic stem cells in mouse models of GBM resection and may have implications for developing effective therapies for GBM.