BACKGROUND: Encapsulating cells prevents the immune destruction of allogeneic cells in the subcutaneous site as well as allogeneic and xenogeneic cells in the central nervous system. However, when encapsulated xenogeneic cells are implanted s.c., they may be subject to rejection by the host. METHODS: Murine C2C12 myoblasts engineered to secrete mouse erythropoietin (mEpo) were used to evaluate the response of control versus FK506-treated xenogeneic recipients (Fischer rats) to encapsulated myoblasts implanted in the s.c. site. RESULTS: Encapsulated C2C12 mEpo cells were rapidly eliminated in immunocompetent Fischer rats. Devices transplanted into nude rats induced a sustained increase in the hematocrit, associated with an extended viability of the encapsulated cells. Short-term immunosuppression with FK506, for periods lasting either 1, 2, or 4 weeks after implantation, permitted the long-term survival of encapsulated C2C12 mEpo cells in Fischer rats. Animals increased their hematocrits to more than 70% and maintained these levels for 13 weeks, independent of the duration of FK506 treatment. Unencapsulated C2C12 mEpo cells injected i.m. in immunosuppressed animals were rejected over this same period. CONCLUSIONS: Encapsulation alone cannot protect xenogeneic myoblasts from immune destruction in the s.c. site. These results highlight the importance of combining the technique of cell encapsulation with transient immunosuppression to achieve long-term survival of xenografted myoblasts in a peripheral immunoreactive site.