The performance of immobilized cells is influenced by mass transport of substrates to the cells and of products from the cells to the bulk fluid, as well as the cell growth in the immobilization matrix. Both internal and external mass transfer limitations have to be considered in the design of immobilized cell systems. In this article, the various methods of measurement of the diffusion coefficient are reviewed. The influence of the presence and growth of living cells in the immobilization matrix on the diffusion coefficient is discussed. Internal diffusion in gel systems, microcapsules, and dense cell masses, that is biofilms, bioflocs, and mammalian cell aggregates is treated in detail, as well as internal mass transport by convection is considered. Finally, the mathematical modeling of reaction–diffusion systems of immobilized cells is discussed, with special attention to gel entrapment and microencapsulation.