An efficient bioartificial liver-assisted device can sustain the lives of patients with acute liver failure. Among different configurations of the bioreactor design, hepatocyte encapsulation has important features that satisfy most requirements of the device. We have encapsulated rat hepatocytes in a two-layer polymeric membrane by complex coacervation using a simple setup and demonstrated enhanced cellular functions up to three times higher than those of the monolayer control. These microcapsules of the functioning hepatocytes have a 2- to 3-microm outer layer of synthetic polymer with 25% 2-hydroxyethyl methacrylate, 25% methacrylic acid, and 50% methyl methacrylate and an inner layer of positively charged modified collagen as a suitable substrate for the enhanced cellular functions. Permeable only to small molecules up to albumin, the microcapsules should allow unimpeded exchange of nutrients, oxygen, growth factors, and metabolites but prevent attack by immunoglobulins of the immune system, and no "skin effect" of the collagen has been observed. Mechanical properties of the microcapsules measured with a nano-indentation method suggest that the microcapsules should be suitable for use in a bioartificial liver-assisted device.