Results of clinical islet transplantation remain disappointing despite the advances in islet technology. Availability of human organs and control of rejection by adequate immunosuppressive therapy remain the unsolved problems. Transplantation of xenogeneic tissue enclosed in immuno-separating membranes without immunosuppressive drugs may be a solution. In the present study porcine pancreatic islets were isolated by semiautomated method and purified utilizing discontinuous Euroficoll gradients on IBM 2991 cell separator. The porcine pancreatic islets were encapsulated with a new one-step method utilizing a home-made droplet generator. Each microcapsule contained one or two islets and microcapsule diameter was approximately that of the islets. This condition allows an optimal diffusion of insulin, glucose, nutrients and oxygen. Consequently, perifusion experiments with encapsulated porcine islets revealed a typical biphasic pattern of insulin release as it was seen in unencapsulated controls. Human erythrocytes were encapsulated and incubated with serum containing hemolysins and complement. These experiments showed that the encapsulated erythrocytes were protected against the hemolytic activity of Ig G and complement fractions. In conclusion, this encapsulation procedure allows the production of a very thin barium alginate membrane around the islets with very little increase of the total volume of transplanted tissue.