Microencapsulation is the procedure by which biologically active material is enclosed within micro spherical, semi permeable containers of a diameter between 0.2 to 3 mm. The microcapsules are usually produced by two-step procedure, in the first step the cells are immobilized within hydro gel micro beads and then the micro beads are covered with semi permeable membrane to obtain a microcapsule . The encapsulation system is unique compare to other cell-based therapy techniques, because it enables the free exchange of nutrients and oxygen between the entrapped cells and their surrounding while preventing the escape and elimination of the entrapped cells. The microcapsuls can be injected at the transplantation bed, localizing the release of therapeutic factor. This approach avoids systemic side effects and increases patient’s compliance . One of its advantages is the use of allogenic (nonhuman) cells as alternative source to the limited supply of donor tissue .