The transplantation of genetically engineered fibroblasts has been shown to be an effective approach for achieving continuous and site-specific delivery of therapeutic molecules to various regions of the central nervous system. However, to our knowledge no one has asked whether soluble factors released from the transplanted fibroblasts influence the delivery of therapeutic molecules from the engrafted cells. To address this issue, we used a newly developed cell encapsulation device to study the functional consequence of the foreign body response on soluble factor delivery from fibroblasts transplanted into adult brain tissue. We found that transplanted fibroblasts increased the level of inflammation and glial cell encapsulation at the transplantation site, and reduced the diffusion of a 70 kDa dextran probe through the reactive tissue. The response, however, did not prevent the diffusion of the 70 kDa dextran test probe indicating that the approach appears suitable for the delivery of neurotrophins and other therapeutic molecules with a molecular weight less than 70 kDa. The results suggest that less reactive cell types may be better suited for sustained delivery of therapeutic molecules into brain tissue.