Cytochrome C was used as a model compound to study the behavior of proteins during the encapsulation procedure in alginate microcapsules and the loss by diffusion during storage. Alginate gel beads were coated with a multilayer membrane consisting of alternating layers of poly(N-vinylamine) and poly(acrylic acid) or water soluble anionic cellulose derivatives, respectively. To obtain high encapsulation yields, it is recommended to use the lowest possible concentration of salts in the precipitation bath. Loss during storage (and use) is minimized by applying at least two polycation/polyanion double layers for the membrane. Cellulose derivatives are superior over poly(acrylic acid). Single layer membranes are not able to retain cytochrome C.