Tissue engineering for spinal cord repair entails a construct which remains biocompatible with the neural tissue, facilitates tissue bridging in a cavitary lesion, moderates astroglial response, and promotes neuronal development with motor function improvement. This article investigates an aligned PCL/ASCM/G-CD-PEGDA hydrogel supplemented with the secreted frizzled-related protein 1 antagonist WAY-316606. This work aims to determine whether WAY-316606 further improves the neuronal and glial repair outcome apart from the mechanical action of the scaffold without the drug. The scaffold employed here uses aligned PCL microfibers of size \(19.17 \pm 4.29~\mu\mathrm{m}\), cylindrical implant of length 15 mm and diameter of 3 mm, and 10 \(\mu\)g WAY-316606 loaded group. Weight loss of the scaffold increased slowly from 5.08% at two weeks to 22.53% at eight weeks, while neural stem-cell viability was greater than 77% in both scaffolds. The way-loaded scaffold resulted in MAP2\(^{+}\) cells of 58.3%, in vitro NeuN\(^{+}\) cells of 34.3%, Nissl-body density of 41.1%, in vivo NeuN\(^{+}\) density of 54.2%, axon-growth distance of 10.2%, and Basso–Beattie–Bresnahan score of 11.5% more than the drug-free scaffold. On the other hand, this formulation led to a reduction in GFAP burden of 32.3% at lesion edge and 46.6% in the lesion core compared to the drug-free scaffold. From the numbers shown, it can be deduced that the scaffold is the main component involved in cavity closure, while WAY-316606 exerts a major influence on neuronal lineage induction and glial response modulation.