Application of alginate-microencapsulated therapeutic cells is a promising approach for diseases that require a local and constant supply of therapeutic molecules. However most conventional alginate microencapsulation systems are associated with low mechanical stability and protrusion of cells which is associated with higher surface roughness and limits their clinical application. Here we have developed a novel multilayer encapsulation system that prevents cells from protruding from capsules. The system was tested using a therapeutic protein with anti-tumor activity overexpressed in mammalian cells. The cell containing core of the multilayer capsule was formed by flexible alginate, creating a cell sustaining environment. Surrounded by a poly-L-lysine layer the flexible core was enveloped in a high-G alginate matrix that is less flexible and has higher mechanical stability, which does not support cell survival. The cells in the core of the multilayer capsule did not show growth impairment and protein production was normal for periods up to 70 days in vitro. The additional alginate layer also lowered the surface roughness compared to conventional cell containing alginate-PLL capsules. Our system provides a solution for two important, often overlooked phenomena in cell encapsulation: preventing cell protrusion and improving surface roughness.