Microbially induced calcite precipitation (MICP) is a sustainable biomineralization process that utilizes naturally abundant bacteria for soil stabilization. However, the bacterial encapsulation in MICP significantly affects urease activity, urea hydrolysis, and reaction fluid’s pH. While past studies have acknowledged bacterial encapsulation, its direct impact on enzymatic activity, crystal growth, and mineralogy remains insufficiently quantified. This study aims to assess the effect of bacterial encapsulation on urease activity, pH, urea hydrolysis, and MICP efficiency. Flask-scale experiments and reactive kinetic modeling studies were conducted under two scenarios: bacterial culture with urea alone to prevent encapsulation and bacterial culture with urea and cementation reagent (calcium chloride, CaCl2) to induce encapsulation. Both experimental and reactive modeling studies corroborated and indicated that urea hydrolysis occurs rapidly without time lag in the absence of cementation reagent. In contrast, adding cementation reagent leads to the bacterial surface being covered by CaCO3, which restricts metabolic activity and decelerates urea hydrolysis and urease activity. However, the effect of encapsulation diminishes with increased bacterial concentrations. The encapsulation significantly lowers the pH due to the minimal availability of free carbonate ions. Overall, the study successfully captures the biomass encapsulation and its impact on urease activity during microbially induced calcite precipitation.