Continuous responses of insulin and glucagon to physiological challenges are essential for the maintenance of normoglycemia and for avoiding subsequent health complications. Transplantation of microencapsulated islets of Langerhans is a promising solution to obtain such a physiological system in diabetic patients. The integrity of the islets' secretory mechanism after encapsulation was studied using rat islets. Islets were isolated by collagenase digestion after which half of the islets were encapsulated with an alginate-poly-L-lysine-alginate membrane. The islets were then challenged for 24 h with glucose (0, 2.7, 5.5, or 20 mM) alone or with 0.1 mM 3-isobutyl-1-methyl-xanthine or 0.1 microM phorbol 12-myristate 13-acetate (PMA), protein kinase A and C pathway stimulators, respectively. The bathing media and cellular contents were radioimmunoassayed for insulin and glucagon. Results obtained using a three-way analysis of variance for microencapsulated and free islets demonstrated that high glucose (P less than 0.05), 3-isobutyl-1-methyl-xanthine (P less than 0.05), and PMA (P less than 0.01) increased insulin secretion, and that glucagon secretion was decreased by high glucose (P less than 0.01) but increased by PMA (P less than 0.05). Free islets secreted more insulin than those which were microencapsulated under all conditions (P less than 0.01). This appeared to be due to the encapsulation process itself, however, as islets which had been 'freed' from the capsules also exhibited a reduced capacity for insulin secretion (P less than 0.05). Analysis of the hormone content of islets after microencapsulation demonstrated reduced insulin levels (P less than 0.01), thus, accounting for the reduction in insulin secretion. As the responses of microencapsulated islets to physiological regulation by glucose and protein kinases A and C were qualitatively identical to those of free islets, transplantation of microencapsulated islets into diabetic patients could mimic the physiological responses of the normal pancreas.