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An engineered 3D architectural network of the biopolymeric hydrogel can mimic the native cell environment that promotes cell infiltration and growth. Among several bio-fabricated hydrogel structures, core–shell microcapsules inherit the potential of cell encapsulation to ensure the growth and transport of cells and cell metabolites. Herein, a co-axial electrostatic encapsulation strategy is used to create and encapsulate the cells into chitin nanofibrils integrated alginate hydrogel microcapsules. Three parameters that are critical in the electrostatic encapsulation process, hydrogel composition, flow rate, and voltage were optimized. The physicochemical characterization including structure, size, and stability of the core–shell microcapsules was analyzed by scanning electron microscope (SEM), FTIR, and mechanical tests. The cellular responses of the core–shell microcapsules were evaluated through in vitro cell studies by encapsulating NIH/3T3 fibroblast cells. Notably, the bioactive microcapsule showed that the cell viability was found excellent for more than 2 weeks. Thus, the results of this core–shell microcapsule showed a promising approach to creating 3D hydrogel networks suitable for different biomedical applications such as in vitro tissue models for toxicity studies, wound healing, and tissue repair.