A method of forming an implantable and retrievable immunoisolatory vehicles is disclosed, the method comprising the steps of first forming a core comprising a volume of at least 1 .mu.l and at least 10.sup.4 cells capable of providing a biologically active product or metabolic or immunologic function, said cells being dispersed in a biocompatible hydrogel or extracellular matrix, and then forming around the core a surrounding external biocompatible thermoplastic or hydrogel jacket free of said cells projecting externally thereof, said jacket having molecular weight cutoff permitting passage of molecules to and from the core through said jacket to provide said biologically active product or function.