Present study analyses the influence of flow characteristics of special water-oil two-phase microfluidic systems regarding the droplet generation, cell encapsulation and trapping processes. Water droplets were dispersed in oil continuous phase with the requirement of precise size distribution to enable effective cell entrapment. The evolving droplet size and the number of encapsulated cells were examined considering the applied flow rate ratios of the two phases. The hydrodynamic behaviour of the microfluidic system was modelled by Finite Element Method (FEM) coupled with particle trajectory calculation applying COMSOL Multiphysics code. The experimental results were compared to the simulation and the applicability of our droplet based cell encapsulating and trapping microfluidic system was characterised.