In order to overcome the side effects of pancreatic transplantation and insulin injection treatment for type I diabetes, we established a drug delivery system employing nanoparticle embedded microcapsules (NEMs). The system co-encapsulated chitosan nanoparticles with γ-aminobutyric acid and β-TC-6 cells for combined drug and cell therapy in diabetes mellitus (DM). The NEMs, which were formed via high-voltage electrostatic method, had an excellent sphericity with a smooth surface. The average size NEM was 245.52 ± 22.00 μm, which indicated a good size for cell encapsulation. Haemolysis rate of NEMs at concentrations of 100, 200 or 300 mg/mL were all below 5%. Relative viability rates of L929 cells with the same concentrations at 24, 48 or 72 h were all above 80%. We implanted bioactive NEMs into type 1 DM mice to evaluate the effect of the combined therapy. The level of blood glucose in the group receiving the combined therapy decreased during the first 2 weeks of treatment. During the next week, the level of blood glucose stayed in a safe range. Body weight continuously increased during the postoperative period after combined therapy group. Oral glucose tolerance test (OGTT) performed after 24 days showed that the level of blood glucose combined therapy reached the maximum peak of 13.04 mmol/L, lower than 16.56 mmol/L for the cell therapy group. This primary study indicated that microencapsulation technology and combined therapy are promising for the treatment of type I diabetes mellitus.