Peptide hydrogels show immense promise as therapeutic materials. Here we present a rationally designed multidomain peptide that self-assembles into nanofibers approximately 8 nm wide, 2 nm high, and micrometers in length in the presence of Mg2+. At a concentration of 1% by weight, the peptide forms an extensive nanofibers network that results in a physically cross-linked viscoelastic hydrogel. This hydrogel undergoes shear thinning and then quickly recovers nearly 100% of its elastic modulus when the shearing force is released, making it ideal for use as an injectable material. When placed in the presence of human embryonic stem cells (ESCs), the nanofibrous hydrogel acts like a sponge, soaking up the vast array of growth factors and cytokines released by the ESCs. The peptide hydrogel sponge can then be removed from the presence of the ESCs and placed in a therapeutic environment, where it can subsequently release these components. In vitro experiments demonstrate that release of stem cell secretome from these hydrogels in the presence of glomerular epithelial cells treated with high glucose significantly decreased protein permeability in a model of diabetes-induced kidney injury. Tracking experiments were then performed to determine the fate of the hydrogel upon injection in vivo. Hydrogels labeled with a Gd3+ MRI contrast agent were injected into the abdominal cavity of mice and found to remain localized over 24 h. This implies that the hydrogel possesses sufficient rigidity to remain localized and release stem cell secretome over time rather than immediately dissolving in the abdominal cavity. Together, the shear thinning and recovery as observed by rheometry as well as secretome absorption and release in vivo demonstrate the potential of the nanofibrous multidomain peptide hydrogel as an injectable delivery agent.