Insufficient oxygenation is a key obstacle in the design of clinically scalable tissue‐engineered grafts. In this work, an oxygen‐generating composite material, termed OxySite, is created through the encapsulation of calcium peroxide (CaO2) within polydimethylsiloxane and formulated into microbeads for ease in tissue integration. Key material parameters of reactant loading, porogen addition, microbead size, and an outer rate‐limiting layer are modulated to characterize oxygen generation kinetics and their suitability for cellular applications. In silico models are developed to predict the local impact of different OxySite microbead formulations on oxygen availability within an idealized cellular implant. Promising OxySite microbead variants are subsequently coencapsulated with murine β‐cells within macroencapsulation devices, resulting in improved cellular metabolic activity and function under hypoxic conditions when compared to controls. Additionally, the coinjection of optimized OxySite microbeads with murine pancreatic islets within a confined transplant site demonstrates ease of integration and improved primary cell function. These works highlight the broad translatability delivered by this new oxygen‐generating biomaterial format, whereby the modularity of the material provides customization of the oxygen source to the specific needs of the cellular implant.

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