To achieve immunoisolation, mouse L929 fibroblasts were encapsulated in approximately 400 microm poly(hydroxyethyl methacrylate-co-methyl methacrylate) (HEMA-MMA) microcapsules and were subsequently implanted in the peritoneal cavity of syngeneic C3H mice. As a baseline for the use of genetically engineered cells in cell encapsulation therapy, the L929 cells were transfected to express a secreted form of human alkaline phosphatase (SEAP). Implantation of empty microcapsules in a PBS suspension resulted in deformation, aggregation, and poor retrievability of the microcapsules. Incubation of microcapsules with medium containing xenogeneic horse serum prior to implantation increased the thickness of the fibrous tissue surrounding the microcapsules. However, immobilization of the microcapsules in a 4% (w/v) SeaPlaque agarose gel prior to implantation allowed complete recovery of the microcapsules and prevented their aggregation and deformation. As a result, approximately 50% of the encapsulated cells remained viable 21 days postimplantation. Moreover, once the viable cells were released from retrieved microcapsules and regrown as monolayers, they expressed SEAP at a level similar to their encapsulated but nonimplanted counterparts.