A parametric study was performed to understand the effect of preparation parameters on size, morphology, and encapsulation efficiency (i.e., cells/microcapsule) of alginate microcapsules prepared using the electrostatic spray method. The preparation parameters studied include sodium alginate concentration, spray voltage, flow rate, and cell density. It was found that both the flow rate and spray voltage have a significant impact on microcapsule size while the microcapsule morphology is greatly influenced by both the sodium alginate concentration and spray voltage. To obtain small cell-loaded microcapsules with good morphology (i.e., round in shape and uniform in size) and high encapsulation efficiency ( cells/microcapsule), the optimal ranges of spray voltage, flow rate, alginate concentration, and cell density are from 1.6–1.8 kV, 1.5–3 ml/h, >1.5% (w/v), and (3–5)106 cells/ml, respectively. Under optimal preparation conditions, cells were found to survive the microencapsulation process well.