Type 1 diabetes (T1D) is characterized by destruction of glucose-responsive insulin-producing pancreatic β-cells and exhibits immune infiltration of pancreatic islets, where CD8 lymphocytes are most prominent. Curative transplantation of pancreatic islets is seriously hampered by the persistence of autoreactive immune cells that require high doses of immunosuppressive drugs. An elegant approach to confer graft protection while obviating the need for immunosuppression is the use of encapsulation devices that allow for the transfer of oxygen and nutrients, yet prevent immune cells from making direct contact with the islet grafts. Here we demonstrate that macroencapsulation devices (TheraCyte) loaded with neonatal pancreatic tissue and transplanted into RIP-LCMV.GP mice prevented disease onset in a model of virus-induced diabetes mellitus. Histological analyses revealed that insulin-producing cells survived within the device in animal models of diabetes. Our results demonstrate that these encapsulation devices can protect from an immune-mediated attack and can contain a sufficient amount of insulin-producing cells to prevent overt hyperglycemia.