Blood vessels play a critical role in pancreatic islet health and function, yet current culture methods to generate islet organoids from human pluripotent stem cells (SC-islets) lack a vascular component. Here, we engineered 3D vascularized SC-islet organoids by assembling SC-islet cells, human primary endothelial cells (ECs) and fibroblasts both in a non-perfused model and a microfluidic device with perfused vessels. Vasculature improved stimulus-dependent Ca2+ influx into SC-β-cells, a hallmark of β-cell function that is blunted in non-vascularized SC-islets. We show that an islet-like basement membrane is formed by vasculature and contributes to the functional improvement of SC-β-cells. Furthermore, cell-cell communication networks based on scRNA-seq data predicted BMP2/4-BMPR2 signaling from ECs to SC-β-cells. Correspondingly, BMP4 augmented the SC-β-cell Ca2+ response and insulin secretion. These vascularized SC-islet models will enable further studies of crosstalk between β-cells and ECs and can serve as in vivo-mimicking platforms for disease modeling and therapeutic testing.