Islet transplantation could become an ideal treatment for severe diabetes to prevent hypoglycemia shock and irreversible diabetic complications, once some of the major and unresolved obstacles are overcome, including limited donor supplies and side effects caused by permanent immunosuppressant use. Approximately 30 years ago, some groups succeeded in improving the blood glucose of diabetic animals by transplanting encapsulated islets with semi-permeable membranes consisting of polymer. A semi-permeable membrane protects both the inner islets from mechanical stress and the recipient’s immune system (both cellular and humoral immunities), while allowing bidirectional diffusion of nutrients, oxygen, glucose, hormones and wastes, i.e., immune-isolation. This device, which enables immune-isolation, is called encapsulated islets or bio-artificial pancreas. Encapsulation with a semipermeable membrane can provide some advantages: (1) this device protects transplanted cells from the recipient’s immunity even if the xenogeneic islets (from large animals such as pig) or insulin-producing cells are derived from cells that have the potential for differentiation (some kinds of stem cells). In other words, the encapsulation technique can resolve the problem of limited donor supplies; and (2) encapsulation can reduce or prevent chronic administration of immunosuppressants and, therefore, important side effects otherwise induced by immunosuppressants. And now, many novel encapsulated islet systems have been developed and are being prepared for testing in a clinical setting. Islet transplantation could become an ideal treatment for severe diabetes to prevent hypoglycemia shock and irreversible diabetic complications, once some of the major and unresolved obstacles are overcome, including limited donor supplies and side effects caused by permanent immunosuppressant use. Approximately 30 years ago, some groups succeeded in improving the blood glucose of diabetic animals by transplanting encapsulated islets with semi-permeable membranes consisting of polymer. A semi-permeable membrane protects both the inner islets from mechanical stress and the recipient’s immune system (both cellular and humoral immunities), while allowing Bidirectional diffusion of nutrients, oxygen, glucose, hormones and wastes, ie, immune-isolation. This device, which enables immune-isolation, is called encapsulated islets or bio- artificial pancreas. Encapsulation with a semipermeable membrane can provide some advantages: (1 ) this device protects transplanted cells from the recipient’s immunity even if the xenogeneic islets (from large animals such as pig) or insulin-producing cells are derived from cells that have the potential for differentiation (some kinds of stem cells). In other words, the encapsulation technique can resolve the problem of limited and now (2) encapsulation can reduce or prevent chronic administration of immunosuppressants and,,, important, side effects otherwise induced by immunosuppressants. And now, many novel encapsulated islet systems have been developed and are being prepared for testing in a clinical setting.