The aim of this article is to develop, characterize, and test a novel 3D bioscaffold matrix that can accommodate pancreatic islets and provide them with a continuous, controlled, and steady source of oxygen to prevent hypoxia-induced damage following transplantation. Hence, a collagen-based cryogel bioscaffold that incorporates calcium peroxide (CPO) into its matrix is made. The optimal concentration of CPO integrated into bioscaffolds is 0.25 wt% and this generates oxygen at 0.21 ± 0.02 × 10 -3 m day -1 (day 1), 0.19 ± 0.01 × 10 -3 m day -1 (day 6), 0.13 ± 0.03 × 10 -3 m d -1 (day 14), and 0.14 ± 0.02 × 10 -3 m d -1 (day 21). Accordingly, islets seeded into cryogel-CPO bioscaffolds have a significantly higher viability and function compared to islets seeded into cryogel alone bioscaffolds; these findings are supported by data from quantitative computational modeling. When syngeneic islets are transplanted into the epididymal fat pad (EFP) of diabetic mice, the cryogel-0.25 wt%CPO bioscaffold improves islet function with diabetic animals re-establishing glycemic control. Mice transplanted with cryogel-0.25 wt%CPO bioscaffolds show faster responses to intraperitoneal glucose injections and have a higher level of insulin content in their EFP compared to those transplanted with islets alone (P < 0.05). The novel oxygen-generating bioscaffold (i.e., cryogel-0.25 wt%CPO) therefore provides a biostable and biocompatible 3D microenvironment for islets which can facilitate islet survival and function at extra-hepatic sites of transplantation.