Cell encapsulation provides cells a three-dimensional structure to mimic physiological conditions and improve cell signaling, proliferation, and tissue organization as compared to monolayer culture. Encapsulation devices often encounter poor mass transport, especially for oxygen, where critical dissolved levels must be met to ensure both cell survival and functionality. To enhance oxygen transport, we utilized perfluorocarbon (PFC) oxygen vectors, specifically perfluorooctyl bromide (PFOB) immobilized in an alginate matrix. Metabolic activity of HepG2 liver cells encapsulated in 1% alginate/10% PFOB composite system was 47-104% higher than alginate systems lacking PFOB. A cubic model was developed to understand the oxygen transport mechanism in the alginate/PFOB composite system. The theoretical flux enhancement in alginate systems containing 10% PFOB was 18% higher than in alginate-only systems. Oxygen uptake rates (OURs) of HepG2 cells were enhanced with 10% PFOB addition under both 20% and 5% O2 boundary conditions, by 8% and 15%, respectively. Model predictions were qualitatively and quantitatively verified with direct experimental OUR measurements using both a perfusion reactor and oxygen sensing plate, demonstrating a greater OUR enhancement under physiological O2 boundary conditions (i.e., 5% O2). Inclusion of PFCs in an encapsulation matrix is a useful strategy for overcoming oxygen limitations and ensuring cell viability and functionality both for large devices (>1 mm) and over extended time periods. Although our results specifically indicate positive enhancements in metabolic activity using the model HepG2 liver system encapsulated in alginate, PFCs could be useful for improving/stabilizing oxygen supply in a wide range of cell types and hydrogels.