Graft failure of alginate-polylysine microencapsulated islets is often interpreted as the consequence of a non-specific foreign body reaction against the microcapsules, initiated by impurities present in crude alginate. The aim of the present study was to investigate if purification of the alginate improves the biocompatibility of alginate-polylysine microcapsules. Alginate was purified by filtration, extraction and precipitation. Microcapsules prepared from crude or purified alginate were implanted in the peritoneal cavity of normoglycaemic AO-rats and retrieved at 1, 2, 3, 6, 9, and 12 months after implantation. With crude alginate, all capsules were overgrown within 1 month after implantation. With purified alginate, however, the portion of capsules overgrown was usually less than 10%, even at 12 months after implantation. All recipients of islet allografts in capsules prepared of purified alginate became normoglycaemic within 5 days after implantation, but hyperglycaemia reoccurred after 6 to 20 weeks. With intravenous and oral glucose tolerance test, all recipients had impaired glucose tolerance and insulin responses were virtually absent. After graft failure, capsules were retrieved (80-100%) by peritoneal lavage. Histologically, the percentage of overgrown capsules was usually less than 10% and maximally 31%. This small portion cannot explain the occurrence of graft failure. The immunoprotective properties of the capsules were confirmed by similar if not identical survival times of encapsulated islet allo- and isografts. Our results show that purification of the alginate improves the biocompatibility of alginate-polylysine microcapsules. Nevertheless, graft survival was still limited, most probably as a consequence of a lack of blood supply to the encapsulated islets.