Objective To induce the hair follicle formation in SD rat footpads by microencapsulated human hair dermal papilla cells (reconstructed dermal papilla). Methods The dermal papilla cells were encapsulated with alginate-polylysine-alginate by using a high-voltage electric field droplet generator. After 1-4 weeks culture, the histological examination was performed in both of reconstructed dermal papilla(DP) and empty microcapsulation. The reconstructed DP were xenotransplanted into the SD rat footpads. The histological examination was detected by microscopy after 6 weeks. Results Extracellular matrix was found around the dermal papilla cells after 1 week culture. Dermal papilla-like structure was found inside the microcapsule after 4 weeks cultrue. At 6 weeks following xenotransplantation, large numbers of fully developed hair follicles were emerged in SD rat footpad. Conclusion The reconstructed DP induced and participated in the formation of regenerated hair follicles.