Introduction. One of the major barriers affecting the viability of encapsulated islets is pericapsular fibrotic infiltration (PFI). This study aimed to design strategies to reduce PFI around intraportally injected alginate microbeads. Methods. Empty, highly purified, barium-M-alginate microbeads (400 µm) were injected intraportally into Lewis rats (3000 beads/rat). Rats (n = 9/group) were treated daily with either rapamycine (RAPA; 1 mg/kg/d PO), tacrolimus (TAC; 2 mg/kg/d PO), a combination of both, or gadolinium-chloride (GdC13, 20 mg/kg/d IV, at day -1 and day +4). Treatment was discontinued at 10 days. Three rats/group were sacrificed at 3, 7, and 42 days after transplantation. Cellular composition of PFI was evaluated by immunohisto- chemistry. Severity of the reaction to the beads was determined by measuring the thickness of PFI on histology. Results. The main cellular components of PFI in the liver were macrophages and myofibroblasts. There was a significant (P < .05) reduction in the thickness of PFI in all treated groups, even 6 weeks after transplantation. Encapsulated rat islets showed excellent insulin response to glucose in vitro, with a stimulation index of 3.6 ± 2.0. Conclusion. Combination of highly purified alginate with short-term immunosuppression reduces fibrotic overgrowth around microbeads injected intraportally.