Donor scarcity precludes the use of pancreatic transplantation to treat type I diabetes. Xenogeneic islet transplantation offers the possibility of overcoming this problem; however, it entails the use of immunoisolation devices to prevent immune rejection of the transplanted islets. These devices consist of a semipermeable membrane, which surrounds the islets and isolates them from the host’s immune system, while allowing the passage of insulin and essential nutrients, including glucose. Problems associated with proposed device designs include diffusion limitations, biocompatibility, device retrieval in the event of failure, and mechanical integrity. Microencapsulation appears to be the most promising system of immunoisolation, however, the design of a device suitable for human clinical use remains a challenge.