This study evaluates the feasibility of poly(ε-caprolactone) as a tracheal replacement. To improve biocompatibility, the lumen was modified by gelatin hydrogel crosslinked with two different reagents, EDC and genipin. It was found that the choice of crosslinking agents could significantly affect human lung carcinoma cell proliferation. Genipin-crosslinked gelatin hydrogel had significantly better cell proliferation than EDC-crosslinked hydrogel. The study further investigated the performance of the PCL tube modified by genipin-crosslinked gelatin, using a rabbit tracheal implantation model with implants harvested and histologically examined. In vivo results showed that the PCL tube possessed suitable mechanical properties for resisting collapse during implantation. Additionally, PCL modified by genipin-crosslinked gelatin was found to suppress granulation tissue growth and prolong animal survival time in comparison with the original PCL tube. Genipin could be an effective treatment to reduce granulation tissue formation at the tracheal anastomoses.