Abstract The methylotrophic Pichia angusta VKM Y-2559 and the oleaginous Cryptococcus curvatus VKM Y-3288 yeast cells were immobilized in a bimodal silica-organic sol–gel matrix comprised of tetraethoxysilane (TEOS), the hydrophobic additive methyltriethoxysilane (MTES) and the porogen polyethylene glycol (PEG). Under carefully optimized experimental conditions, employing basic catalysts, yeast cells have become the nucleation centers for a silica-organic capsule assembled around the cells. The dynamic process involved in the formation of the sol–gel matrix has been investigated using optical and scanning electron microscopic techniques. The results demonstrated the influence of the MTES composition on the nature of the encapsulation of the yeast cells, together with the architecture of the three-dimensional (3D) sol–gel biomatrix that forms during the encapsulation process. A silica capsule was found to form around each yeast cell when using 85vol% MTES. This capsule was found to protect the microorganisms from the harmful effects that result from exposure to heavy metal ions and UV radiation. The encapsulated P. angusta BKM Y-2559 cells were then employed as a biosensing element for the detection of methanol. The P. angusta-based biosensor is characterized by high reproducibility (Sr, 1%) and operational stability, where the biosensor remains viable for up to 28 days.