Mesenchymal stem cells (MSCs) have the potential to treat early intervertebral disc (IVD) degeneration. However, during intradiscal injection, the vast majority of cells leaked out even in the presence of hydrogel carrier. Recent evidence suggests that annulus puncture is associated with cell leakage and contributes to osteophyte formation, an undesirable side effect. This suggests the significance of developing appropriate carriers for intradiscal delivery of MSCs. We previously developed a collagen microencapsulation platform, which entraps MSCs in a solid microsphere consisting of collagen nanofiber meshwork. These solid yet porous microspheres support MSC attachment, survival, proliferation, migration, differentiation, and matrix remodeling. Here we hypothesize that intradiscal injection of MSCs in collagen microspheres will outperform that of MSCs in saline in terms of better functional outcomes and reduced side effects. Specifically, we induced disc degeneration in rabbits and then intradiscally injected autologous MSCs, either packaged within collagen microspheres or directly suspended in saline, into different disc levels. Functional outcomes including hydration index and disc height were monitored regularly until 6 months. Upon sacrifice, the involved discs were harvested for histological, biochemical, and biomechanical evaluations. MSCs in collagen microspheres showed advantage over MSCs in saline in better maintaining the dynamic mechanical behavior but similar performance in hydration and disc height maintenance and matrix composition. More importantly, upon examination of gross appearance, radiograph, and histology of IVD, delivering MSCs in collagen microspheres significantly reduced the risk of osteophyte formation as compared to that in saline. This work demonstrates the significance of using cell carriers during intradiscal injection of MSCs in treating disc degeneration.