A novel process for bacterial production of nanocellulose hydrogel pouches for applications for cell therapy, cell encapsulation, cell delivery, cell proliferation and cell differentiation has been invented. The process is based on fermentation of bacteria producing nanocellulose in oxygen permeable mold interconnected with tubing with diameter less than 5 mm. The resulting Bacterial Nanocellulose (BNC) hydrogel pouch is biocompatible and non-degradable in the human body. The inner wall of the pouch is highly porous and supports cell migration, cell proliferation and cell differentiation. The wall of the pouch allows controlled diffusion of extracellular components. The BNC pouch with injected cells can be implanted and used for treatment of diseases such as diabetes by local delivery of insulin. There are numerous applications of BNC pouches with injected cells in tissue engineering, regenerative medicine and cancer treatment.