Microcapsules of alginate cross-linked with divalent cations are the most common system for cell immobilization. In this work, the polyion complex (PIC) microcapsules were made using sodium alginate/barium chloride as the wall materials and gelatin/poly (vinyl alcohol) (PVA) as the extracellular matrices. The result of the permeability experiment of microcapsules using proteins with different molecular weight showed that the capsule has a molecular weight cut-off (MWCO) of 150 kDa. The hepatocytes encapsulated in microcapsules with gelatin and PVA in the core rapidly aggregated as incubation time increased. The aggregated hepatocytes showed high ammonia removal and albumin synthesis, showing a high potential for use in a bio artificial liver system.