Novel calcium alginate poly(ethylene glycol) hybrid microspheres (Ca-alg-PEG) were developed and evaluated as potentially suitable materials for cell microencapsulation. Grafting 5-13% of the backbone units of sodium alginate (Na-alg) with alpha-amine-omega-thiol PEG maintained the gelling capacity in presence of calcium ions, while thiol end groups allowed for preparing chemically crosslinked hydrogel via spontaneous disulfide bond formation. The combination of these two gelling mechanisms yielded Ca-alg-PEG. Human hepatocellular carcinoma cells (Huh-7) were encapsulated in Ca-alg-PEG and calcium alginate beads (Ca-alg), and cultured for 2 weeks under agitation conditions. Immediately after completion of the microencapsulation, the cell viability was 60% and similar in Ca-alg-PEG and Ca-alg. The proliferation of Huh-7 encapsulated in Ca-alg-PEG was slightly higher than in Ca-alg. Accelerated proliferation after 2 weeks was observed for the encapsulation in Ca-alg-PEG. The production of albumin confirmed the functionality of the encapsulated Huh-7 cells. The study confirms the suitability of Ca-alg-PEG and the one-step technology for cell microencapsulation.