Hemoglobin-based capsules for use as blood substitutes are successfully fabricated by covalent layer-by-layer assembly. Dialdehyde heparin (DHP) is used both as one of the wall components and a cross-linker without employing other extraneous or toxic crosslinking agents. The biocompatibility of (Hb/DHP)6 microcapsules is evaluated through the 3-(4,5-dimethylthiazol-2-yl)-2,5-diphenyltetrazolium bromide) (MTT) assay and cell experiments. The hemocompatibility of (Hb/DHP)6 microcapsules is characterized in terms of prothrombin time, thrombin time, activated partial thromboplastin time, and hemolysis rate. The oxygen-carrying capacity of the microcapsules is demonstrated by converting the deoxy-Hb state of the microcapsules into the oxy-Hb state. All these results demonstrate that the hemoglobin-based microcapsules exhibit oxygen-carrying capacity as well as biocompatibility and hemocompatility, indicating that the as-prepared capsules have great potential to function as blood substitutes.