Synergistical bacterial species can perform more varied and complex transformations of chemical substances than either species alone, but this is rarely used commercially because of technical difficulties in maintaining mixed cultures. Typical problems with mixed cultures on scale are unrestrained growth of one bacterium, which leads to suboptimal population ratios, and lack of control over bacterial spatial distribution, which leads to inefficient substrate transport. To address these issues, we designed and produced a synthetic ecosystem by co-encapsulation in a silica gel matrix, which enabled precise control of the microbial populations and their microenvironment. As a case study, two greatly different microorganisms: Pseudomonas sp. NCIB 9816 and Synechococcus elongatus PCC 7942 were encapsulated. NCIB 9816 can aerobically biotransform over 100 aromatic hydrocarbons, a feat useful for synthesis of higher value commodity chemicals or environmental remediation. In our system, NCIB 9816 was used for biotransformation of naphthalene (a model substrate) into CO2 and the cyanobacterium PCC 7942 was used to provide the necessary oxygen for the biotransformation reactions via photosynthesis. A mathematical model was constructed to determine the critical cell density parameter to maximize oxygen production, and was then used to maximize the biotransformation rate of the system.