Encapsulated cells were formed from the assembly of cationic and anionic alternating layers using a number of polyelectrolyte-based systems. Chitosan, alginate, hyaluronic acid, and oligonucleotides were used as polyelectrolytes to encapsulate individual E. coli cells, which were used as a model. Zeta potential measurements taken for both chitosan/alginate and chitosan/hyaluronic acid systems indicate successful layer-by-layer (LbL) deposition and gave full reversal of the surface change eight times. Layer adsorption was further observed by fluorescence microscopy, and, through a newly developed protocol for sample preparation, transmission electron microscopy micrographs clearly showed the presence of LbL assembly on the outer layer of the cell membrane, in the nanometer range. A second generation of E. coli cells could be grown from encapsulated first generation cells, demonstrating that the cellular activity was not affected by the presence of polyelectrolyte multilayers. Hybridization between attached oligonucleotide sequences and the complementary sequence was demonstrated by both fluorescence spectroscopy and microscopy. Fluorescence energy transfer data recorded after hybrid formation showed that at a molar ratio of 10: 20 (donor: acceptor), Q and I were 92.3% and 52.5%, respectively, which suggests that fluorescein fluorescence was quenched by 92.3% and that the fluorescence of rhodamine was enhanced by 52.5%. Oligonucleotide incorporation was stabilized by deposition of four alternating layers, hence offering not only the potential use of the encapsulated cell as a bio-recognition system but also its application in a number of fields such as oligonucleotide delivery, gene therapy, and the use of DNA as an immunocompatible coating.