Microencapsulation of plant-beneficial bacteria, such as pink pigmented facultative methylotrophs (PPFM), may greatly extend the shelf life of these Gram-negative microorganisms and facilitate their application to crops for sustainable agriculture. A species of PPFM designated Methylobacterium radiotolerans was microencapsulated in cross-linked alginate microcapsules (CLAMs) prepared by an innovative and industrially scalable process that achieves polymer cross-linking during spray-drying. PPFM survived the spray-drying microencapsulation process with no significant loss in viable population, and the initial population of PPFM in CLAMs exceeded 1010 CFU/g powder. The PPFM population in CLAMs gradually declined by 4 to 5 log CFU/g over one year of storage. The extent of alginate cross-linking, modulated by adjusting the calcium phosphate content in the spray-dryer feed, did not influence cell viability after spray-drying, viability over storage, or dry particle size. However, particle size measurements and light microscopy of aqueous CLAMs suggest that enhanced crosslinking may limit the release of encapsulated bacteria. This work demonstrates an industrially scalable method for producing alginate-based inoculants that may be suitable for on-seed or foliar spray applications.