Recombinant Escherichia coli cells, over-expressing cyclopentanone monooxygenase activity, were immobilized in polyelectrolyte complex capsules, made of sodium alginate, cellulose sulfate, poly(methylene-co-guanidine), CaCl2 and NaCl. More than 90% of the cell viability was preserved during the encapsulation process. Moreover, the initial enzyme activity was fully maintained within encapsulated cells while it halved in free cells. Both encapsulated and free cells reached the end point of the Baeyer-Villiger biooxidation of 8-oxabicyclo[3.2.1]oct-6-en-3-one to 4,9-dioxabicyclo[4.2.1]non-7-en-3-one at the same time (48 h). Similarly, the enantiomeric excess above 94% was identical for encapsulated and free cells.