Foreign body reaction (FBR) to implanted biomaterials and medical devices is common and can compromise the function of implants or cause complications. For example, in cell encapsulation, cellular overgrowth (CO) and fibrosis around the cellular constructs can reduce the mass transfer of oxygen, nutrients and metabolic wastes, undermining cell function and leading to transplant failure. Therefore, materials that mitigate FBR or CO will have broad applications in biomedicine. Here we report a group of zwitterionic, sulfobetaine (SB) and carboxybetaine (CB) modifications of alginates that reproducibly mitigate the CO of implanted alginate microcapsules in mice, dogs and pigs. Using the modified alginates (SB-alginates), we also demonstrate improved outcome of islet encapsulation in a chemically-induced diabetic mouse model. These zwitterion-modified alginates may contribute to the development of cell encapsulation therapies for type 1 diabetes and other hormone-deficient diseases.