Encapsulation of biomolecules and cells in hydrogel capsules via emulsion templating frequently induces an irreversible loss of bioactivity, because of the use of nonaqueous solvents. Here, we introduce an all-aqueous electrospray (AAE) approach to generate aqueous two-phase emulsion droplets, and we use them as templates to fabricate microcapsules with preserved cell viability. The approach allows formation of monodisperse microparticles with tunable sizes, variable compositions, and interior architectures in a mild gelation process. This technique potentially benefits a variety of new biomedical applications, such as delivery of bioactive proteins, transplantation of living cells, and assembly of cell-mimicking structures.