This article describes the preparation and in vitro characterization of novel genipin cross-linked alginate-chitosan (GCAC) microcapsules that have potential for live cell therapy applications. This microcapsule system, consisting of an alginate core with a covalently cross-linked chitosan membrane, was formed via ionotropic gelation between calcium ions and alginate, followed by chitosan coating by polyelectrolyte complexation and covalent cross-linking of chitosan by naturally derived genipin. Results showed that, using this design concept and the three-step procedure, spherical GCAC microcapsules with improved membrane strength, suppressed capsular swelling, and suitable permeability can be prepared. The suitability of this novel membrane formulation for live cell encapsulation was evaluated, using bacterial Lactobacillus plantarum 80 (pCBH1) (LP80) and mammalian HepG2 as model cells. Results showed that capsular integrity and bacterial cell viability were sustained 6 mo postencapsulation, suggesting the feasibility of using this microcapsule formulation for live bacterial cell encapsulation. The metabolic activity of the encapsulated HepG2 was also investigated. Results suggested the potential capacity of this GCAC microcapsule in cell therapy and the control of cell signaling; however, further research is required.