Cell microencapsulation holds promise for the treatment of many diseases by the continuous delivery of therapeutic products. The biocompatibility of the microcapsules and their biomaterials components is a critical issue for the long-term efficacy of this technology. The objective of this paper is to provide detailed information about the principal factors affecting the biocompatibility of alginates and alginate-poly-l-lysine microcapsules, which are the most frequently employed biomaterials and encapsulation devices for cell immobilization, respectively. Some of these factors include the alginate composition and purification, the selection of the polycation, the interactions between the alginates and the polycation, the microcapsule fabrication process, the uniformity of the devices and the implantation procedure. Improved knowledge will lead to the production of standardized transplantation-grade biomaterials and biocompatible microcapsules.