Widespread use of pancreatic islet transplantation for treatment of type 1 diabetes (T1D) is currently limited by requirements for long-term immunosuppression, limited donor supply, and poor long-term engraftment and function. Upon isolation from their native microenvironment, islets undergo rapid apoptosis, which is further exacerbated by poor oxygen and nutrient supply following infusion into the portal vein. Identifying alternative strategies to restore critical microenvironmental cues, while maximizing islet health and function, is needed to advance this cellular therapy. We hypothesized that biophysical properties provided through type I oligomeric collagen macroencapsulation are important considerations when designing strategies to improve islet survival, phenotype, and function. Mouse islets were encapsulated at various Oligomer concentrations (0.5 -3.0 mg/ml) or suspended in media and cultured for 14 days, after which viability, protein expression, and function were assessed. Oligomer-encapsulated islets showed a density-dependent improvement in in vitro viability, cytoarchitecture, and insulin secretion, with 3 mg/ml yielding values comparable to freshly isolated islets. For transplantation into streptozotocin-induced diabetic mice, 500 islets were mixed in Oligomer and injected subcutaneously, where rapid in situ macroencapsulation occurred, or injected with saline. Mice treated with Oligomer-encapsulated islets exhibited rapid (within 24 h) diabetes reversal and maintenance of normoglycemia for 14 (immunocompromised), 90 (syngeneic), and 40 days (allogeneic). Histological analysis showed Oligomer-islet engraftment with maintenance of islet cytoarchitecture, revascularization, and no foreign body response. Oligomer-islet macroencapsulation may provide a useful strategy for prolonging the health and function of cultured islets and has potential as a subcutaneous injectable islet transplantation strategy for treatment of T1D.