The use of nonautologous cell lines producing a therapeutic substance encapsulated within alginate microcapsules could be an alternative way of treating different diseases in a cost-effective way. Malignant brain tumors have been proposed to be treated locally using engineered cells secreting proteins with therapeutic potential encapsulated within alginate microcapsules. Optimization of the alginate capsule bioreactors is needed before this treatment can be a reality. Recently, we have demonstrated that alginate-poly-L-lysine microcapsules made with high-G alginate and a gelled core disintegrated as cells proliferated. In this study we examined the growth and endostatin secretion of 293-EBNA (293 endo) cells encapsulated in six different alginate microcapsules made with native high-G alginate or enzymatically tailored alginate. Stability studies using an osmotic pressure test showed that alginate-poly-L-lysine-alginate microcapsules made with enzymatically tailored alginate was mechanically stronger than alginate capsules made with native high-G alginate. Growth studies showed that the proliferation of 293 endo cells was diminished in microcapsules made with enzymatically tailored alginate and gelled in a barium solution. Secretion of endostatin was detected in lower amounts from the enzymatically tailored alginate microcapsules compared with the native alginate microcapsules. The stability of the alginate microcapsules diminished as the 293 endo cells grew inside the capsules, while empty alginate microcapsules remained stable. By using microcapsules made of fluorescenamine-labeled alginate it was clearly visualized that cells perforated the alginate microcapsules as they grew, destroying the alginate network. Soluble fluorescence-labeled alginate was taken up by the 293 endo cells, while alginate was not detected in live spheroids within fluorescence-labeled alginate microcapsules. Despite that increased stability was achieved by using enzymatically tailored alginate, the cell proliferation destroyed the alginate microcapsules with time. It is therefore necessary to use cell lines that have properties more suited for alginate encapsulation before this technology can be used for therapy.