Encapsulation of insulin-producing cells in semipermeable membranes has the potential to provide an effective treatment for insulin-dependent diabetes with little or no immunosuppression of the host. Improvements in alginate, a marine polysaccharide commonly used for cell encapsulation, have revived interest in this material. However, serious obstacles, including a reliable cell source and a better understanding of immune acceptance issues, remain to be addressed before a clinically applicable therapeutic procedure based on encapsulated cells becomes available.