We have developed a bioengineered implant (BI) to evaluate strategies to promote graft survival and function in models of islet transplantation in mice. The BI, sized for implantation within a fold of intestinal mesentery, consists of a disk-shaped, polyvinyl alcohol sponge infused with a type I collagen hydrogel that contains dispersed donor islets. To promote islet vascularization, the BI incorporates a spherical alginate hydrogel for sustained release of vascular endothelial growth factor (VEGF). BIs that contained 450-500 islets from syngeneic (C57Bl/6) donors and 20 ng of VEGF reversed streptozotocin (STZ)-induced diabetes in 100% of mice (8/8), whereas BIs that contained an equivalent number of islets, but which lacked VEGF, reversed STZ-induced diabetes in only 62.5% of mice (5/8). Between these "+VEGF" and "-VEGF" groups, the time to achieve normoglycemia (8-18 days after implantation) did not differ statistically; however, transitory, postoperative hypoglycemia was markedly reduced in the +VEGF group relative to the -VEGF group. Notably, none of the mice that achieved normoglycemia in these two groups required exogenous insulin therapy once the BIs began to fully regulate levels of blood glucose. Moreover, the transplanted mice responded to glucose challenge in a near-normal manner, as compared to the responses of healthy, nondiabetic (control) mice that had not received STZ. In future studies, the BIs described here will serve as platforms to evaluate the capability of immunomodulatory compounds, delivered locally within the BI, to prevent or reverse diabetes in the setting of autoimmune (type 1) diabetes.