An apparatus and method for coating micron-sized or sub-micron-sized particles such as living cells. The coating apparatus includes an encapsulation chamber enclosing a two-layer water-oil system for coating each islet cell with an aqueous polymeric coat. Islets together with an aqueous polymer solution are fed by a feed device that utilizes the principle of hydrodynamic focusing in order to ensure encapsulation of individual islets. The polymer in the aqueous coat is subsequently crosslinked by being exposed to laser light to produce structurally stable microcapsules of controllable thickness of the order of tens of microns. Encapsulated islets are removed from the encapsulation chamber by a valveless pump and recovered by filtration or centrifugation.