A new technique of encapsulating thyroid tissue with an artificial membrane for protection against immune attack is reported. The membrane was made of calcium alginate and a poly-L-lysin coating. The membrane prevents the diffusion of large molecules such as hemoglobin but freely permits the passage of smaller molecules such as T4 and culture medium 1640. Because larger molecules are barred, the contents of the microcapsules are safe from immune system rejection. In vitro cultured, microencapsulated rabbit thyroid tissue secreted T3 and T4, achieving a concentration of 8.68 +/- 2.93 nmol/L and 245.23 +/- 124.87 nmol/L, after 3 days; this level remained steady for 6 to 9 days of incubation. These microcapsules show promise as a treatment modality and as a possible solution to the problem of immuno-isolation.