Nerve conduits pre-filled with hydrogels are frequently explored in an attempt to promote nerve regeneration. This study examines the interplay between the porosity of the conduit wall and the level of bioactivity of the hydrogel used to fill the conduit. Nerve regeneration in porous (P) or non-porous (NP) conduits that were filled with either collagen-only or collagen enhanced with a covalently attached neurite-promoting peptide mimic of the glycan Human Natural Killer Cell Antigen-1 (m-HNK) were compared in a 5 mm critical size defect in the mouse femoral nerve repair model. While collagen is a cell-friendly matrix that does not differentiate between neural and non-neural cells, the m-HNK-enhanced collagen specifically promotes axon growth and appropriate motor neuron targeting. In this study, animals treated with non-porous (NP) conduits filled with collagen grafted with m-HNK (CollagenHNK) had the best functional recovery, commensurate with a substantial improvement in all tested histomorphometric parameters (number of axons, degree of raw tissue area, percentage of myelinated nerve fibers, cross-sectional area of myelinated nerve fibers) relative to all other conduit conditions. Our data indicate that under some conditions, the use of generally cell friendly fillers such as collagen, may limit nerve regeneration. This finding is significant, considering the frequent use of collagen based hydrogels as fillers of nerve conduits.