Self-cross-linkable polyelectrolyte pairs comprised of poly(methacrylic acid, sodium salt-co-2-[methacryloyloxy]ethyl acetoacetate) (70:30 mol ratio, A70) and poly-L-lysine are incorporated into CaAlg beads to form either a covalently cross-linked shell or a core-cross-linked bead. In both cases the reactive polyanion is added to a solution of sodium alginate that may contain live cells and dropped into a calcium chloride gelling bath. Subsequent exposure to poly-L-lysine (15-30 kDa) leads to formation of a cross-linked shell, while exposure to lower molecular weight poly-L-lysine (4-15 kDa) leads to formation of an interpenetrating matrix of covalently cross-linked synthetic polymer within the CaAlg template. The resulting spherical composites are resistant to chemical and mechanical stress yet remain cyto-compatible. This approach to cell-encapsulation may be useful for cell immuno-isolation in therapeutic cell transplants.