Capsules based on the polyelectrolyte complexation between the polyanions sodium alginate and sodium cellulose sulphate with the polycation poly(methylene-co-guanidine) hydrochloride in the presence of calcium chloride have previously shown important advantages for cell encapsulation. However, in vivo long-term applications require capsule features that are well suited for the functionality of encapsulated cells. These should be targeted to the site of implantation with an appropriate size, a relative stability, and suitable diffusion properties. This study shows the effect of capsule size reduction, from 1 mm to 400 microm, on capsule quality control, mechanical stability, diffusion properties, and in vitro activities of the encapsulated cells. Following a controlled preparation, it was determined that the capsule mechanical stability was largely dependent on the volume ratio of the capsule over the membrane. The molecule diffusion time was related to the surface/volume ratio of the capsule even for the capsules exhibiting an identical cut-off towards the proteins and the dextran molecules. Finally, the in vitro cellular activities, for both primary cultures of rat islets and murine hepatocytes, were improved for cells encapsulated into the 400 microm capsules compared with those in the 1 mm capsules. All of these findings suggest that the smaller capsules present better properties for future clinical applications, at the same time widening the choice of implantation site, and strengthen the notion that slight changes in the capsular morphological parameters can largely influence the graft function in vivo.