Transplantation of islets is becoming an established method for treating type 1 diabetes. However, viability of islets is greatly affected by necrosis/apoptosis induced by oxidative stress and other insults during isolation and subsequent in vitro culture. Expression of cytoprotective proteins, such as heme oxygenase-1 (HO-1), reduces the deleterious effects of oxidative stress in transplantable islets. We have generated a fusion protein composed of HO-1 and TAT protein transduction domain (TAT/PTD), an 11-aa cell penetrating peptide from the human immunodeficiency virus TAT protein. Transduction of TAT/PTD-HO-1 to insulin-producing cells protects against TNF-alpha-mediated cytotoxicity. TAT/PTD-HO-1 transduction to islets does not impair islet physiology, as assessed by reversion of chemically induced diabetes in immunodeficient mice. Finally, we report that transduction of HO-1 fusion protein into islets improves islet viability in culture. This approach might have a positive impact on the availability of islets for transplantation.