In this study, the conversion of carbon dioxide to methanol was realized through a novel biochemical approach that was catalyzed by three dehydrogenases: formate dehydrogenase (FateDH), formaldehyde dehydrogenase (FaldDH), and alcohol dehydrogenase (ADH). The dehydrogenases were encapsulated in an alginate-silica (ALG-SiO2) hybrid gel, which was prepared through in situ growth of the silica precursor within an alginate solution, which was followed by Ca2+ cross-linking. Methanol yields that were catalyzed by free dehydrogenases, and by dehydrogenases immobilized in pure alginate (ALG) gel and in ALG-SiO2 hybrid gel, were 98.8%, 71.3%, and 98.1%, respectively. Furthermore, methanol yield that was catalyzed by dehydrogenases in an ALG-SiO2 composite could be retained as high as 76.2% after 60 days storage and as high as 78.5% after 10 times recycling. The significantly improved catalytic properties of the dehydrogenases in the ALG-SiO2 composite were attributed to the creation of the appropriate immobilizing microenvironment: high hydrophilicity, moderate rigidity and flexibility, ideal diffusion characteristics, and optimized cage confinement effect.