Probiotics are rapidly becoming popular and important tool for preserving our natural health. Probiotics usually comprise of lactic acid producing bacteria. The objective of the present study was to evaluate the antioxidant and anticholesterolemic activity of two probiotic isolates and further its improvement through sonication and encapsulation in sodium alginate beads in vitro. Two isolates (LB7 and LB9) were selected and tested for LPO, CAT and SOD activity. Result showed that LB9 strain exhibit more antioxidant activity compared to LB7. Both the isolates were subjected to anticholestrolemic activity evaluation in two forms (Encapsulated and Non Encapsulated). The immobilized cells exhibit better anticholesterolemic activity. Immobilization increased the antioxidant activity as well as the ability of Lactobacillus strains for cholesterol reduction in samples. It is concluded that the Lactobacillus isolated are antioxidants and anticholestrolemic agents and their bioactivity is improved by encapsulation.