Objectives: In order to investigate the encapsulation of interleukin 1 receptor antagonist (IL-RA) gene-modified mesenchymal stem cells (MSCs) in alginate-poly-L-lysine (APA) microcapsules for the persistent delivery of interleukin 1 receptor antagonist (IL-RA) to treat Rheumatoid arthritis (RA). Methods: We transfect mesenchymal stem cells with IL-RA gene, and quantify the IL-RA proteins released from the encapsulated cells followed by microencapsulation of recombinant mesenchymal stem cells, and thus observe the permeability of APA microcapsules and evaluate clinical effects after induction and treatment of collagen-induced arthritis (CIA). The concentration of IL-RA in the supernatant was determined by IL-RA ELISA kit by run in technical triplicates using samples from three separate mice. Results: Encapsulated IL-RA gene-transfected cells were capable of constitutive delivery of IL-RA proteins for at least 30 days. Moreover, the APA microcapsules could inhibit the permeation of fluorescein isothiocyanate-conjuncted immunoglobulin G. Also, it has been found that the APA microcapsules can significantly attenuate collagen induced arthritis after delivering of APA microcapsules to rats. Conclusions: Our results demonstrated that the nonautologous IL-RA gene-transfected stem cells are of potential utility for RA therapy.