Type-1 diabetes mellitus (T1DM) is characterized by damage of beta cells in pancreatic islets. Cell-sheet engineering, one of the newest therapeutic approaches, has also been used to create functional islet systems by creating islet/beta cell-sheets and transferring these systems to areas that require minimally invasive intervention, such as extrahepatic areas. Since islets, beta cells, and pancreas transplants are allogeneic, immune problems such as tissue rejection occur after treatment, and patients become insulin dependent again. In this study, we aimed to design the most suitable cell-sheet treatment method and macrocapsule device for cell-sheets that could provide long-term normoglycemia in rats. In this study, we developed a macrodevice system designed for insulin delivery to an extrahepatic transplant site using alginate hydrogels of varying concentrations. Firstly, mesenchymal stem cells (MSCs) and beta cells were co-cultured in a temperature-responsive culture dish to obtain a cell-sheet and then macroencapsulated in 2% alginate. The mechanical properties and pore-sizes of the macrocapsule device from alginate were characterized. The viability and activity of cell-sheets in the macrocapsule were evaluated in-vitro and in-vivo. Fasting blood glucose levels, body weight, and serum insulin and C-peptide levels were evaluated after transplantation in diabetic rats. The results showed that the blood glucose level was 225 mg/dl on the 10th day and 168 mg/dl on the 15th day, and remained at the normoglycemic level for 210 days after transplantation. An alginate macrocapsule device has been developed in this study to protect the cell-sheet from immune attack after subcutaneous transplantation and allow the graft to function for a long time as an alternative to pancreatic islet transplantation to patients with T1DM in the future. The results of our study provide the basis for future animal and human studies in which this method can be used to provide long-term cellular therapy in T1DM patients.