Introduction-We have shown that incorporation of the hydrophilic bile acid, ursodeoxycholic acid, into b-cell microcapsules exerted positive effects on microcapsules' morphology and size, but these effects were excipient and method dependent. Cell viability remained low which suggests low octane-water solubility and formation of highly hydrophilic dispersion, which resulted in low lipophilicity dispersion and compromised cellular permeation of the incorporated bile acid. Thus, this study aimed at investigating various microencapsulating methodologies using highly lipophilic bile acid (LPBA), in order to optimise viability and functions of microencapsulated b-cells. Methods-Four different types of microcapsules were produced with (test) and without (control) LPBA, totalling eight different microcapsules. Microencapsulating methodologies were screened for best microcapsule-cell functions and microencapsulating processes were examined in terms of frequency, formulation flow, total bath-gelation time and cellular concurrent stream-integration rate, cell-viability, insulin production and inflammatory profile. Results-Optimum biotechnological processes include formation frequency (Hz) of 2350, formulation flow (ml/min) of 1.2, total gelation time (min) of 18 and cellular concurrent stream-integration rate (ml/min) of 0.7. In all formulations, LPBA consistently improved cell viability, insulin production, mitochondrial activities and ameliorated inflammation. Conclusion-The deployed biotechnological processes and LPBA optimised formation and functions of b-cell microcapsules, which suggests potential applications in diabetes mellitus via the creation of more stable b-cell microcapsules capable of delivering adequate levels of insulin to control glycaemia and potentially curing diabetes.