Probiotics have shown beneficial effects on health and prevention of diseases in humans. However, a concern for application of probiotics is the loss of viability during storage and gastrointestinal transit. The aim of this study was to develop an encapsulation system to preserve viability of probiotics when they are administrated orally and apply Lactobacillus rhamnosus GG (LGG) as a probiotic model to evaluate the effectiveness of this approach using in vitro and in vivo experiments. LGG was encapsulated in hydrogel beads prepared using pectin, a food grade polysaccharide, glucose, and calcium chloride, and lyophilized by freeze-drying. Encapsulated LGG was cultured in vitro under the condition that mimicked the physiological environment of the human gastrointestinal tract. Compared to non-encapsulated LGG, encapsulation increased tolerance of LGG in the acid condition, protected LGG from protease digestion, and improved shelf time when stored at the ambient condition, in regard of survivability and production of p40, a known LGG-derived protein involved in LGG's beneficial effects on intestinal homeostasis. To evaluate the effects of encapsulation on p40 production in vivo and prevention of intestinal inflammation by LGG, mice were gavaged with LGG containing beads and treated with dextran sulphate sodium (DSS) to induce intestinal injury and colitis. Compared to non-encapsulated LGG, encapsulated LGG enhanced more p40 production in mice, and exerted higher levels of effects on prevention of DSS-induced colonic injury and colitis and suppression of pro-inflammatory cytokine production. These data indicated that the encapsulation system developed in this study preserves viability of LGG in vitro and in vivo, leading to longer shelf time and enhancing the functions of LGG in the gastrointestinal tract. Thus, this encapsulation approach may have the potential application for improving efficacy of probiotics.