Closed-loop artificial pancreas systems have recently been proposed as a solution for treating stage I diabetes by reproducing the function of the pancreas. However, there are many unresolved issues associated with their development, including monitoring and controlling oxygen, immune responses and the optimization of glucose. All of which need to be monitored and controlled to produce an efficient and viable artificial organ, that can become integrated in the patient and maintain homeostasis. This research focused on monitoring oxygen concentration, specifically achieving this kinetically as the oxygen gradient in an artificial pancreas made of alginate spheres containing islet cells. Functional Nanoparticle (NP) for measuring the oxygen gradient in different hydrogel cellular environments using fluorescence-based (F) microscopy were developed and tested. By ester bond, a linker Pluronic F127 was conjugated with a carboxylic acid modified polystyrene Nanoparticle (510 nm). A hydrophilic/ hydrophobic interaction between the commercially available oxygen sensitive fluorophore with F127 results in Fluorescence-based Nano oxygen particle (FNOP). The in-house synthesized FNOP was calibrated inside electro sprayed alginate filled hydrogels and demonstrated a good broad Dynamic Range (2.73-22.23) mg/L as well as a Resolution of -0.01 mg/L with an accuracy of ± 4%. The calibrated FNOP was utilised for continuous measuring of oxygen concentration gradient for cell lines RIN-m5F / HeLa for more than five days in alginate hydrogel spheres in vitro