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Despite the widespread role of transforming growth factor-β3 (TGFβ3) in wound healing and tissue regeneration, its long-term controlled release has not been demonstrated. Here, we report microencapsulation of TGFβ3 in poly-d-l-lactic-co-glycolic acid (PLGA) microspheres and determine its bioactivity. The release profiles of PLGA-encapsulated TGFβ3 with 50:50 and 75:25 PLA:PGA ratios differed throughout the experimental period. To compare sterilization modalities of microspheres, bFGF was encapsulated in 50:50 PLGA microspheres and subjected to ethylene oxide (EO) gas, radio-frequency glow discharge (RFGD), or ultraviolet (UV) light. The release of bFGF was significantly attenuated by UV light, but not significantly altered by either EO or RFGD. To verify its bioactivity, TGFβ3 (1.35 ng/mL) was control-released to the culture of human mesenchymal stem cells (hMSC) under induced osteogenic differentiation. Alkaline phosphatase staining intensity was markedly reduced 1 week after exposing hMSC-derived osteogenic cells to TGFβ3. This was confirmed by lower alkaline phosphatase activity (2.25 ± 0.57 mU/mL/ng DNA) than controls (TGFβ3- free) at 5.8 ± 0.9 mU/mL/ng DNA (p < 0.05). Control-released TGFβ3 bioactivity was further confirmed by lack of significant differences in alkaline phosphatase upon direct addition of 1.35 ng/mL TGFβ3 to cell culture (p > 0.05). These findings provide baseline data for potential uses of microencapsulated TGFβ3 in wound healing and tissue-engineering applications.