Encapsulation responses are a widespread and primitive biological phenomenon. The mechanisms responsible for encapsulation of non-neoplastic lesions such as parasites and implanted foreign materials have been extensively researched. However, while it is well-known that many benign tumors are surrounded by a well-defined capsule and that the presence of this capsule is an integral determinant of prognosis, the mechanisms by which the capsule forms have yet to be explained fully. Two complementary theories have been postulated to explain this phenomenon. Since it is difficult to discriminate between the hypotheses using experimental techniques, mathematical modeling provides a natural approach for testing and comparing the assumptions and the consequences associated with each of them. In this talk, I will present a mathematical model that describes the processes of tumor growth and encapsulation. By performing a range of numerical simulations we are able to compare the two hypotheses for capsule formation and to predict which we believe is more likely to explain the experimental observations. Further, using a modified version of the model, it is also possible to show that transcapsular spread or invasion of the tumor may be due to the production by the tumor cells of proteases and their subsequent action.