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Islet transplantation is limited by the need for chronic immunosuppression and the paucity of donor tissue. As new sources of human β-cells are developed (e.g., stem cell-derived tissue), transplanting them in a durable device could obviate the need for immunosuppression, while also protecting the patient from any risk of tumorigenicity. Here, we studied (1) the survival and function of encapsulated human β-cells and their progenitors and (2) the engraftment of encapsulated murine β-cells in allo- and autoimmune settings.Human islets and human fetal pancreatic islet-like cell clusters were encapsulated in polytetrafluorethylene devices (TheraCyte) and transplanted into immunodeficient mice. Graft survival and function was measured by immunohistochemistry, circulating human C-peptide levels, and blood glucose levels. Bioluminescent imaging was used to monitor encapsulated neonatal murine islets.Encapsulated human islet-like cell clusters survived, replicated, and acquired a level of glucose responsive insulin secretion sufficient to ameliorate hyperglycemia in diabetic mice. Bioluminescent imaging of encapsulated murine neonatal islets revealed a dynamic process of cell death followed by regrowth, resulting in robust long-term allograft survival. Further, in the non-obese diabetic (NOD) mouse model of type I diabetes, encapsulated primary β-cells ameliorated diabetes without stimulating a detectable T-cell response.We demonstrate for the first time that human β-cells function is compatible with encapsulation in a durable, immunoprotective device. Moreover, our study suggests that encapsulation of β-cells before terminal differentiation will be a successful approach for new cell-based therapies for diabetes, such as those derived from stem cells.