Transplantation of islet or beta cells is seen as the cure for type 1 diabetes since it allows physiological regulation of blood glucose levels without requiring any compliance from the patients. In order to circumvent the use of immunosuppressive drugs (and their side effects), semipermeable membranes have been developed to encapsulate and immunoprotect transplanted cells. This review presents the historical developments of immunoisolation and provides an update on the current research in this field. A particular emphasis is laid on the fabrication, characterization and performance of membranes developed for immunoisolation applications.