Background: Matrigel, a derivative of the extracellular matrix (ECM) of a mouse sarcoma, simulates a basement membrane in culture and has previously shown positive results in stem cell culture. Microencapsulation of cells is a 3D cell culture technique in which cells are enveloped in a matrix to promote the formation of spheroids. Spheroids are advantageous as they encourage better maintenance of cellular phenotype and more closely emulate in vivo conditions due to 3D cellular interactions. In this project, a microfluidic device was used to encapsulate cells in a hollow, bioactive PEG-heparin shell. We hypothesize that adding Matrigel to the core of the bioactive microcapsule will result in increased definitive endoderm differentiation efficiency for pluripotent stem cells. Methods: Microencapsulation was achieved with a microfluidic Polydimethylsiloxane (PDMS) device. The shell is composed of 4-arm-polyehtylene glycol and methacrylated heparin. Spheroid formation encouraged with ROCK inhibitor. Definitive endoderm differentiation was induced with growth factors Activin A and CHIR99021. Experimental groups used: Matrigel growth factor containing (GF+) in core, Matrigel growth factor reduced (GFR) in core, and capsules without Matrigel in the core. Method of analysis: RT- qPCR. Results: After using a seven-day procedure for definitive endoderm differentiation, encapsulated cells cultured with Matrigel (GF+ and GFR) in core displayed a higher expression of definitive endoderm markers Sox17 and CXCR4 than cells in capsules without Matrigel. The use of Matrigel in the core did not significantly induce expression of markers for mesoderm or ectoderm. Conclusion: Matrigel in the core of a bioactive core-shell microcapsule improves definitive endoderm gene expression compared to cells differentiated in capsules without Matrigel. These findings may indicate improved downstream differentiation efficiency after Matrigel incorporation. Further studies would demonstrate any impact Matrigel core encapsulation would have on other germ layer differentiations. These technologies with increased efficiency of definitive endoderm could ultimately be used in cellular therapy applications.