Islet transplantation has the potential to treat type I diabetes, however, its clinical application is limited due to the massive apoptotic cell death and other post-transplantation challenges to islet grafts. Therefore, the objective of this study was to determine whether ex vivo transduction of rat insulin producing INS-1E cells and human islets with adenoviral vector encoding human X-linked inhibitor of apoptosis (Adv-hXIAP) can protect them from inflammatory cytokines and improve their viability and function. There was dose dependent XIAP gene expression. XIAP expression led to decrease in the activities of caspase 3/7, 8 and 9, resulting in reduced apoptotic cell death induced by a cocktail of inflammatory cytokines such as IL-1β, TNFα, and IFNγ. Prolonged normoglycemic control could be achieved by transplantation of Adv-XIAP transduced human islets under the kidney capsule of streptozotocin induced diabetic NOD-SCID mice. Immunohistological staining of the islets bearing kidney sections at day 42 after transplantation was positive for insulin. Moreover, the protective effect of XIAP was reversed by coadministration of XIAP inhibitor embelin. These results indicate that ex vivo transduction of islets with Adv-XIAP will decrease cytokine induced apoptosis and improve the outcome of islet transplantation.