Pericapsular fibrotic overgrowth (PFO) may be attributed to an immune response against microcapsules themselves or to antigen shedding through microcapsule pores from encapsulated islet tissue. Modification of microcapsules aimed at reducing pore size should prevent PFO and improve graft survival. This study investigated the effect of increased gelling time (20 vs. 2 min) in barium chloride on intrinsic properties of alginate microcapsules and tested their biocompatibility in vivo. Prolonged gelling time affected neither permeability nor size of the microcapsules. However, prolonged gelling time for 20 min produced brittle microcapsules compared to 2 min during compression test. Encapsulation of human islets in both types of microcapsules affected neither islet viability nor function. The presence of PFO when transplanted into a large animal model such as baboon and its absence in small animal models such as rodents suggest that the host immune response towards alginate microcapsules is species rather than alginate specific.