Reliable encapsulation of hemoglobin (Hb) within polypeptide multilayer nanofilms has been achieved by a template-based approach, and protein functionality has been demonstrated postencapsulation. The method is general in scope and could be useful for many other encapsulants. Met-Hb was adsorbed onto 5 microm-diameter CaCO3 microparticles, and the Hb-coated particles were encapsulated within a multilayer nanofilm of poly(L-glutamic acid) (PLGA) and poly(L-lysine) (PLL) by layer-by-layer assembly. The CaCO3 templates were then dissolved within the PLGA/PLL nanofilms by addition of ethylenediaminetetraacetic acid. Encapsulation of Hb was proved by fluorescence microscopy, the pH-dependence of retention of Hb was determined by visible wavelength absorbance, and conversion of the encapsulated met-Hb to deoxy-Hb and oxy-Hb was demonstrated by spectroscopic analysis of the Soret absorption peak under various conditions. It thus has been shown that control of Hb oxygenation within polypeptide multilayer nanofilm artificial cells is possible, and that Hb thus encapsulated can bind, release, and subsequently rebind molecular oxygen. This work therefore represents an advance in the development of polypeptide multilayer film artificial red blood cells.