Prostaglandin E-2 (PGE(2)) has recently been recognized to play a role in immune regulation and tissue regeneration. However, the short half-life of PGE(2) limits its clinical application. Improving the delivery of PGE(2) specifically to the target organ with a prolonged release method is highly desirable. Taking advantage of the adequate space and proximity of the renal parenchyma, renal subcapcsular delivery allows minimally invasive and effective delivery to the entire kidney. Here, we report that by covalently cross-linking it to a collagen matrix, PGE(2) exhibits an adequate long-term presence in the kidney with extensive intraparenchymel penetration through renal subcapsular delivery and significantly improves kidney function. Sox9 cell lineage tracing with intravital microscopy revealed that PGE(2) could activate the endogenous renal progenitor Sox9(+) cells through the Yap signaling pathway. Our results highlight the prospects of utilising renal subcapsular-based drug delivery and facilitate new applications of PGE(2)-releasing matrices for regenerative therapy.