Induced pluripotent stem cells (iPSCs) are expected to be an ideal cell source for biomedical applications, but such applications usually require a large number of cells. Suspension culture of iPSC aggregates can offer high cell yields but sometimes results in excess aggregation or cell death by shear stress. Hydrogel-based microencapsulation can solve such problems observed in Suspension culture, but there is no systematic evaluation of the possible capsule formulations. In addition, their biological effects on entrapped cells are still poorly studied so far. We, therefore, immobilized mouse iPSCs in three different types of calcium-alginate (Alg-Ca) hydrogel-based microcapsules; (i) Alg-Ca capsules without further treatment (Naked), (ii) Alg-Ca capsules with poly-L-lysine (PLL) coating (Coated), and (iii) Alg-PLL membrane capsules with liquid cores (Hollow). After 10 days of culture within the medium containing serum and leukemia inhibitory factor, we obtained good cellular expansions (10-13-fold) in Coated and Hollow capsules that were similar to Suspension culture. However, 32 +/- 9% of cellular leakage and lower cell yield (about threefold) were observed in Naked capsules. This was not observed in Coated and Hollow capsules. In addition, immunostaining and quantitative RT-PCR showed that the formation of primitive endodermal layers was suppressed in Coated capsules contrary to all other formulations. This agenesis of primitive endoderm layers in Coated capsules is likely to be the main cause of the significantly better pluripotency maintenance in hydrogel-based encapsulation culture. These results are helpful in further optimizing hydrogel-based iPSC culture, which can maintain better local cellular environments and be compatible with mass culture. (C) 2014 American Institute of Chemical Engineers