Polymeric artificial cells have the potential to be used for a wide variety of therapeutic applications, such as the encapsulation of transplanted islet cells to treat diabetic patients. Recent advances in biotechnology, molecular biology, nanotechnology and polymer chemistry are now opening up further exciting possibilities in this field. However, it is also recognized that there are several key obstacles to overcome in bringing such approaches into routine clinical use. This review describes the historical development and principles behind polymeric artificial cells, the present state of the art in their therapeutic application, and the promises and challenges for the future.