Clinical islet transplantation is an effective therapy in restoring physiological glycemic control in type 1 diabetics. However, allogeneic islets derived from cadaveric sources elicit immune responses that result in acute and chronic islet destruction. To prevent immune destruction of islets, transplant recipients require lifelong delivery of immunosuppressive drugs, which are associated with debilitating side effects. Biomaterial-based strategies to eliminate the need for immunosuppressive drugs are an emerging therapy for improving islet transplantation. In this context, two main approaches have been used: 1) encapsulation of islets to prevent infiltration and contact of immune cells, and 2) local release of immunomodulatory molecules from biomaterial systems that suppress local immunity. Synthetic biomaterials provide excellent control over material properties, molecule presentation, and therapeutic release, and thus, are an emerging platform for immunomodulation to facilitate islet transplantation. This review highlights various synthetic biomaterial-based strategies for preventing immune rejection of islet allografts.