The application of alginate - chitosan (AC) microcapsules to liver cell transplantation has not been previously investigated. In the current in vitro study, we have investigated the potential of AC microcapsules for the encapsulation of liver cells and show that the AC membrane supports the survival, proliferation and protein secretion by entrapped hepatocytes. The AC membrane provides cell immuno-isolation and has the potential for cell cryopreservation. The AC microcapsule has several advantages compared to more widely used alginate-poly-L-lysine (APA) microcapsules for the application of cell therapy.