Microencapsulation of biomolecules, cells and chemicals is widely used in the food and pharmaceutical industries to improve stability, delivery and to control the release of encapsulated moieties. Among encapsulation matrices, alginate is preferred due to its low cost, biodegradability and biocompatibility. Current methods for producing stable alginate gels involve dropping alginate suspensions into divalent cation solutions. This procedure is difficult to scale-up and produces undesirably large alginate beads. In our novel encapsulation method, alginate gelation occurs during spray drying upon volatilisation of a base and rapid release of otherwise unavailable calcium ions. The resulting particles, with median particle sizes in the range 15–120 µm, are insoluble in solution. Cellulase and hemicellulase activities encapsulated by this method were not compromised during spray drying and remained stable over prolonged storage. The procedure described here offers a one-step alternative to other encapsulation methods that are costly and difficult to scale-up.