This paper presents a tube-shaped chitosan-collagen hydrogel conduit containing cells for peripheral nerve regeneration. The conduit is simply made by molding, and composed of two layers: A chitosan layer strengthens the conduit mechanically, and a collagen layer provides a scaffold for cells supporting the axonal extension. By using our conduit, peripheral nerves could be regenerated in high quality, because those encapsulated cells release paracrine factors including nerve growth factors (NGF) and supply good environments for nerve tissue reconstruction. We examined the biocompatibility and bioabsorbability of our conduit, and the results represent that our device induced the extension of neurites of neural model cells and was dissolved away in specific terms. We believe this conduit will become a cutting-edge conduit for peripheral nerve surgeries.