Long, long, ago, before tissue engineering and stem cells, Colton and Chick (Trans Am Soc Artif Intern Organs. 1975;21:8-15) reported on a novel approach to treat diabetes using beta cells and hollow fiber membranes. Despite the passage of time, immunoisolation has failed to move to the forefront of innovative innovative insulin therapies. Whether it be what is now called macroencapsulation (with or without blood contact) or microencapsulation, the intent is to deliver therapeutic biomolecules while isolating implanted cells from the host immune system. While encapsulated cells remain viable for extended periods in vitro, in vivo studies have resulted in limited cell survival. Insufficient delivery of oxygen and other nutrients to the implanted capsules is thought to contribute to the observed death of encapsulated cells in vivo. In addition, indirect presentation of shed antigens leads to stimulation of the immune. We have been facing this issues with HEMA-MMA copolymer microcapsules. We hypothesized that delivery of VEGF from the encapsulated cells would vascularize the tissue surrounding the implanted microcapsules to provide the required enhanced delivery of nutrients. We also hypothesized that delivery of IL10 by cells would modulate the immune/inflammatory response. VEGF delivery was successful in enhancing the apparent vascularization of the region surrounding implanted capsules, but the resulting vasculature had a small effect on recovered cell viability, suggesting that much more VEGF needs to be produced per cell. An early loss of viability also suggested that it is important to have the vasculature present early and that additional growth factors may also be necessary to create a mature, functional vasculature. IL10 had similar modest benefits, suggesting the need for a different strategy than that based on genetic modification of the transplanted cells.