Clinical studies have provided evidence for dopamine (DA) cell replacement therapy in Parkinson’s Disease. However, grafts derived from foetal tissue or pluripotent stem cells (PSCs) remain heterogeneous, with a high proportion of non-dopaminergic cells, and display subthreshold reinnervation of target tissues, thereby highlighting the need to identify new strategies to improve graft outcomes. In recent work, Stromal Cell-Derived Factor-1 (SDF1), secreted from meninges, has been shown to exert many roles during ventral midbrain DA development and DA-directed differentiation of PSCs. Related, co-implantation of meningeal cells has been shown to improve neural graft outcomes, however, no direct evidence for the role of SDF1 in neural grafting has been shown. Due to the rapid degradation of SDF1 protein, here, we utilised a hydrogel to entrap the protein and sustain its delivery at the transplant site to assess the impact on DA progenitor differentiation, survival and plasticity. Hydrogels were fabricated from self-assembling peptides (SAP), presenting an epitope for laminin, the brain’s main extracellular matrix protein, thereby providing cell adhesive support for the grafts and additional laminin–integrin signalling to influence cell fate. We show that SDF1 functionalised SAP hydrogels resulted in larger grafts, containing more DA neurons, increased A9 DA specification (the subpopulation of DA neurons responsible for motor function) and enhanced innervation. These findings demonstrate the capacity for functionalised, tissue-specific hydrogels to improve the composition of grafts targeted for neural repair.