Over the last several decades, considerable research has focused on the development of cell encapsulation technology to treat a number of diseases, especially type 1 diabetes. One of the key advantages of cell encapsulation is that it permits the use of xenogenic tissue, particularly animal-derived cell lines. This is an attractive idea, because it circumvents the issue of a limited human organ supply. Furthermore, as opposed to whole islets, cell lines have a better proliferative capacity and can easily be amplified in culture to provide an endless supply of uniform cells. We have previously described a macroencapsulation device for the immunoisolation of insulin-secreting 1-cells. The aim of this work was to optimize the viability and insulin secretion of cells encapsulated within this device. Specifically, the effects of cell packing density and device membrane configuration were investigated. The results indicated that cell density plays an important role in the secretory capacity of the cells, with higher cell density leading to increased insulin secretion. Increasing the transport area of the capsule by modifying the membrane configuration also led to an improvement in the insulin output of the device.