Choroid plexus epithelial cells (CPECs) as a secretory epithelium are responsible for the secretion of cerebrospinal fluid (CSF). Beyond this classical tenet, CPECs also synthesize and release many neurotrophic factors such as antioxidants into the CSF, participating in brain homeostasis. In this study, CPECs were isolated from rat's brain and encapsulated in alginate microcapsules. Firstly, functional properties of alginate microcapsules and encapsulated CPECs were examined in vitro. Following, micro-encapsulated CPECs were grafted into rats' brains that were pretreated with Aβ. The in vivo studies include western blotting against Caspase-3 and Terminal-Transferase dUTP Nick End Labeling test that were performed to detect apoptosis in brain tissues. The in vivo part also included immunohistochemistry against Iba-1, glial fibrillary acidic protein, and Brdu to detect microglial migration, gliosis, and neurogenesis, respectively. Moreover, the activity of superoxide dismutase enzyme in hippocampi also was measured, and the memory was assessed by shuttle box apparatus. Our data suggest that transplantation of encapsulated CPECs resulted in a significant decrease in apoptosis, reduced migration microglia, diminished gliosis, increased neurogenesis, and improved long-term memory as well as upregulated antioxidant activity. Since microencapsulated CPECs do not need immunosuppression following implantation, and also we showed their neuroprotective effects against Aβ toxicity and oxidative stress, this may be a suitable candidate for cell therapy in neurological disorders.