This study examined the parameters governing the formation of stable oxygen carrying emulsions for use in cellular encapsulation. Select perfluorocarbon, surfactant and physiological salt solution mixtures were manufactured and compared. Dynamic light scattering (DLS) particle size analysis, Fourier transform infrared spectroscopy (FTIR), measurements of effective oxygen diffusivity and toxicity assessments in cell culture were utilized to generate optimized solutions for use in microencapsulation of cellular products. The most stable, non-toxic and oxygen permeable emulsions were made from low w/v percent pluronic polaxamers dissolved in physiological saline and emulsified with 10% v/v perfluorotributylamine (FC-43). These emulsions had stable particle sizes at room temperature, little or no toxicity in cell co-cultures with the surfactant solution and enhanced diffusivity relative to the physiological salt solution.