A graft copolymer having poly(L-lysine) (PLL) as the backbone and monomethoxy poly(ethylene glycol) (MPEG) as pendent chains was synthesized. This polycationic copolymer was used to form microcapsules with sodium alginate, a polyanion. Microcapsules and model surfaces formed with PLL-graft-MPEG demonstrated reduced protein adsorption, complement binding and cell adhesion in vitro compared to materials with unmodified PLL. Microcapsules with PLL-g-MPEG on the surface were seen to be much more biocompatible than the widely used alginate/PLL/alginate microcapsule in a mouse intraperitoneal implant model. The graft copolymers demonstrated a lower affinity for alginate and increased microcapsule permeability more than PLL. To correct this, pentalayered alginate/PLL/alginate/PLL-g-MPEG/alginate microcapsules were fabricated, and these demonstrated both appropriate permselectivity and enhanced biocompatibility. [on SciFinder (R)]