Host reactivity to biocompatible immunoisolation devices is a major challenge for cellular therapies, and a human screening model would be of great value. We designed new types of surface modified barium alginate microspheres, and evaluated their inflammatory properties using human whole blood, and the intraperitoneal response after three weeks in Wistar rats. Microspheres were modified using proprietary polyallylamine (PAV) and coupled with macromolecular heparin conjugates (Corline Heparin Conjugate, CHC). The PAV-CHC strategy resulted in uniform and stable coatings with increased anti-clot activity and low cytotoxicity. In human whole blood, PAV coating at high dose (100 µg/ml) induced elevated complement, leukocyte CD11b and inflammatory mediators, and in Wistar rats increased fibrotic overgrowth. Coating of high dose PAV with CHC significantly reduced these responses. Low dose PAV (10 µg/ml) ± CHC and unmodified alginate microbeads showed low responses. That the human whole blood inflammatory reactions paralleled the host response shows a link between inflammatory potential and initial fibrotic response. CHC possessed anti-inflammatory activity, but failed to improve overall biocompatibility. We conclude that the human whole blood assay is an efficient first-phase screening model for inflammation, and a guiding tool in development of new generation microspheres for cell encapsulation therapy.