Sustained-release albumin microspheres (MSs) can be obtained by chemically cross-linking albumin. However, a significant challenge is preventing the cross-linking of the active pharmaceutical (protein or small molecule) ingredient (API) with the MS matrix. To prevent cross-linking of the API with the albumin matrix, a smart "solution cross-linking-microencapsulation'' method was developed which involves cross-linking albumin solution with glutaraldehyde first, neutralizing any excess glutaraldehyde with sodium bisulphite, followed by the addition of API and finally spray drying. Using lysozyme as model API, MS formulations FL1 and FL2 were prepared and characterized. Physicochemical characterization using FT-IR and bioactivity evaluation indicate that microencapsulated API did not undergo any significant change in its native structure and the bioactivity was preserved during the formulation processing. Preliminary immunogenicity potential of the cross-linked albumin matrix determined by in vivo studies did not show any significant increase in antigen-specific serum-IgG levels, implying safety and biocompatibility of the cross-linked albumin matrix.