We describe the results of the first study to show that adult rat and human islets can be protected against xenogenic rejection in immunocompetent diabetic mice by encapsulating them in a novel alginate-based microcapsule system with no additional permselective membrane. Nonencapsulated islets lost function within 4 -8 days after being transplanted into diabetic Balb/c mice, whereas transplanted encapsulated adult rat or human islets resulted in normoglycemia for >7 months. When rat islet grafts were removed 10 and 36 weeks after transplantation, the mice became immediately hyperglycemic, thus demonstrating the efficacy of the encapsulated islets. The explanted capsules showed only a mild cellular reaction on their surface and a viability of >85%, and responded to a glucose stimulus with a 10-fold increase in insulin secretion. Furthermore, transplanted mice showed a slight decrease in the glucose clearance rate in response to intraperitoneal glucose tolerance tests 3-16 weeks after transplantation; after 16 weeks, the rate remained stable. Similar results were obtained for encapsulated human islets. Thus we provide the first evidence of successful transplantation of microencapsulated human islets. In conclusion, we have developed a novel microcapsule system that enables survival and function of adult rat and human islets in immunocompetent mice without immunosuppression for >7 months. Diabetes 54:687-693, 2005