Cell encapsulation was developed to entrap viable cells within semi-permeable membranes. The engrafted encapsulated cells can exchange low molecular weight metabolites in tissues of the treated host to achieve long-term survival. The semipermeable membrane allows engrafted encapsulated cells to avoid rejection by the immune system. The encapsulation procedure was designed to enable a controlled release of bioactive compounds, such as insulin, other hormones, and cytokines. Here we describe a method for encapsulation of catabolic cells, which consume lipids for heat production and energy dissipation (thermogenesis) in the intra-abdominal adipose tissue of obese mice. Encapsulation of thermogenic catabolic cells may be potentially applicable to the prevention and treatment of obesity and type 2 diabetes. Another potential application of catabolic cells may include detoxification from alcohols or other toxic metabolites and environmental pollutants.