Lactobacillus kefiranofaciens M1 (M1) has been shown to possess many different beneficial health effects including anti-colitis activity. The purpose of this study was to develop a novel and easily scaled-up encapsulating technique that would improve the temperature tolerance of the bacterium and reduce the sensitivity of the organism to gastrointestinal fluid. A mixture of sodium alginate, gellan gum and skim milk powder was used as a coating material to entrap M1. The M1 gel was then directly freeze dried in order to dehydrate the covering and form microcapsules. The viable cell numbers of M1 present only dropped ten folds after the freeze-drying encapsulation process. The viable cell counts remained constant at 5 × 107 CFU/g after heating from 25 °C to 75 °C and holding at 75 °C for 1 min. The viable cell counts were reduced to 106 CFU/g and 105 CFU/g after 8-week storage at 4 °C and subsequent heat treatment with simulated gastrointestinal fluid test (SGFT) and bile salts, respectively. The effect of encapsulated M1 on the organism's anti-colitis activity was evaluated using the dextran sodium sulfate (DSS) induced colitis mouse model. An in vivo study indicated that administration of heat treated encapsulated M1 was able to ameliorate DSS-induced colitis producing a significant reduction in the bleeding score and an attenuation of inflammatory score. These findings clearly demonstrate that encapsulation of M1 using this novel technique is able to provide good protection from temperature changes and SGFT treatment and also does not affect the organism's anti-colitis activity.