A novel neuro-compatible peptide-based hydrogel has been designed and developed, which contains microtubule stabilizing and neuroprotective short peptide. This hydrogel shows strong three-dimensional cross-linked fibrillary networks, which can capture water molecules. Interestingly, this hydrogel serves as excellent biocompatible soft material for 2D and 3D (neurosphere) neuron cell culture and provides stability of key cytoskeleton filaments such as microtubule and actin. Remarkably, it was observed that this hydrogel slowly enzymatically degrades and releases neuroprotective peptide, which promotes neurite outgrowth of neuron cell as well as exhibits excellent neuroprotection against anti-NGF-induced toxicity in neuron cells. Further, it can encapsulate anti-Alzheimer and anticancer hydrophobic drug curcumin, releases slowly, and inhibits significantly the growth of a 3D spheroid of neuron cancer cells. Thus, this novel neuroprotective hydrogel can be used for both neuronal cell transplantation for repairing brain damage as well as a delivery vehicle for neuroprotective agents, anti-Alzheimer, and anticancer molecules. © 2017 American Chemical Society.