Context: Gliclazide (G) is a commonly prescribed drug for Type 2 diabetes (T2D). In a recent study, we found that when G was combined with a primary bile acid, and gavaged to an animal model of Type 1 diabetes (T1D), it exerted a hypoglycemic effect. We hypothesized this to be due to metabolic activation of the primary bile acid into a secondary or a tertiary bile acid, which enhanced G solubility and absorption. The tertiary bile acid, taurocholic acid (TCA), has shown strong permeation-enhancing effects in vivo. Thus, we aimed to design, characterize, and test microcapsules incorporating G and TCA in an animal model of T1D. Methods: Microcapsules were prepared using the polymer sodium alginate (SA). G-SA microcapsules (control) and G-TCA-SA microcapsules (test) were extensively examined (in-vitro) at different pH and temperatures. The microcapsules were gavaged to diabetic rats, and blood glucose and G concentrations in serum were examined. Ex-vivo studies were also performed using a muscle cell line (C2C12), and cell viability and glucose intake post-treatment were examined. Results: G-TCA-SA microcapsules showed good stability, uniformity, and thermal and chemical excipient compatibilities. TCA did not change the size or the shape of the microcapsules, but it enhanced their mechanical resistance and reduced their swelling properties. G-TCA-SA enhanced the viability of C2C12 cells over 24 hours, and exerted a hypoglycemic effect in alloxan-induced type-1 diabetic rats. Conclusions: The incorporation of TCA into G-microcapsules resulted in functionally improved microcapsules with a positive effect on cell viability and glycemic control in Type-1 diabetic animals.