Methods, modelling and applications of gel immobilisation and micro-encapsulation of living cells are reviewed. These two methods are most frequently used as they allow for excellent cell containment and are suitable for a wide variety of cell types. The first section provides a brief introduction to the whole area of living cell immobilisation by presenting a classification of immobilised cell systems and giving the overall objectives of this review. The next section deals with gel immobilisation. An overview of the various materials and methods used is presented. The physiology of gel entrapped cells (bacteria, fungi, algae plant cells as well as animal cells) is discussed and included here is a discussion on some specific experimental techniques which have been used to obtain in situ information of gel systems. This section ends with a review of applications for entrapped microbial, plant and animal cells. The third section gives an overview of the various materials and methods used to micro-encapsulate living cells and their applications. The micro-encapsulation of Islets of Langerhans as a bio-artificial pancreas to treat diabetes is treated in depth. Attention is further given to the production of biochemical compounds by encapsulated mammalian, microbial and plant cells. A discussion of the growth of animal cells in micro-capsules is also included. In the fourth section, engineering aspects of gel immobilised and micro-encapsulation are discussed. The discussion of mass transfer is limited to internal mass transport by diffusion. Finally, it is shown how mathematical models can be used to quantitatively describe and analyse the behaviour of immobilised cells and steady-state, pseudo-steady state as well as dynamic models are discussed.