The goal of the present study was to analyze if sustained delivery of elevated doses of recombinant erythropoietin (Epo), by genetically modified and immunoprotected allogenic cells, was able to correct the chronic anemia, characteristic of a spontaneous mouse model of beta-thalassemia (Hbb thal 1). Mouse C2C12 myoblast cells were transfected with a plasmid containing the mouse Epo cDNA and a mutated dihydrofolate reductase (DHFR) gene for gene amplification upon administration of increasing doses of methotrexate. In order to immunoprotect the transplanted cells, the stably modified cells were loaded into polyethersulfone microporus hollow fibers which were implanted subcutaneously into Hbb thal 1 mice. An increase in hematocrit starting 2 weeks after implantation was associated with elevated blood levels of Epo and an improved red blood cell phenotype. The latter indicated an improvement of cell morphology and membrane defects, in particular a reduced amount of free alpha hemoglobin chain, the hallmark of globin chain imbalance in beta-thalassemia. A reduction of reticulocyte count contrasting with the increase in hematocrit was also observed suggesting an improved erythrocyte survival. We conclude that the phenotype can be durably improved in some beta-thalassemic mice upon in vivo delivery of recombinant Epo by polymer encapsulated cells. Sustained elevated delivery of recombinant Epo holds promise for the treatment of beta-thalassemia-associated chronic anemia.