The bioartificial pancreas, composed of a semi-permeable hydrogel encapsulating insulin-secreting cells, has attracted attention as a treatment for type 1 diabetes. In this study, we developed phospholipid polymer-modified alginate hydrogel beads that encapsulated spheroids of the pancreatic beta cell line MIN6. The hydrogel beads were composed of methacrylated alginic acid, which enabled both ionic and covalent cross-linking, resulting in a hydrogel that was more stable than conventional alginate hydrogels. Furthermore, modification of biocompatible 2-methacryloyloxyethyl phosphorylcholine (MPC) polymers suppressed protein adsorption to the hydrogel beads. Hydrogel beads encapsulating MIN6 spheroids maintained the cell viability and insulin secretion ability in response to glucose levels in vitro. Allogenic transplantation of gel beads lowered blood glucose levels in diabetic mice for 30 days, whereas gel beads without MPC polymer modification failed to regulate blood glucose levels. These results indicate that MPC polymer modification of hydrogels provides a new strategy for the fabrication of functional bioartificial pancreas and transplantable biomaterials for cell therapies.