Introduction: The extension of islet transplantation to a wider number of type 1 diabetes patients is compromised by severe adverse events related to the immunosuppressant therapy required for allogenic islet transplantation. In this context, microencapsulation offers the prospects of immunosuppressive-free therapy by physically isolating islets from the immune system. However, current biomaterials need to be optimized to: improve biocompatibility, guaranty the maintenance of graft viability and functionality, and prevent fibrosis overgrowth around the capsule in vivo. Accumulating evidence suggest that mesenchymal stem cells (MSCs) and anchor points consisting of tripeptides arg-gly-asp (RGD) have cytoprotective effects on pancreatic islets. Here, we investigated the effect of supplementing reference M-rich alginate microcapsules with MSCs and RGD-G rich alginate on bioprocessing as well as on human pancreatic islets viability and functionality. Methods: We characterized the microcapsules components, and then for the new microcapsule composite product: we analyzed the empty capsules biocompatibility and then investigated the benefits of MSCs and RGD-G rich alginate on viability and functionality on the encapsulated human pancreatic islets in vitro. We performed viability tests by confocal microscopy and glucose stimulated insulin secretion (GSIS) test in vitro to assess the functionality of naked and encapsulated islets. Results: Encapsulation in reference M-rich alginate capsules induced a reduction in viability and functionality compared to naked islets. This side-effect of encapsulation was in part counteracted by the presence of MSCs but the restoration was complete with the combination of both MSCs and the RGD-G rich alginate. Conclusions: The present findings show that bioprocessing a favorable composite environment inside the M-rich alginate capsule with both MSCs and RGD-G rich alginate improves human islets survival and functionality in vitro. (C) 2020 The Authors. Published by Elsevier Inc.