Islet cell transplantation is a promising beta cell replacement therapy for patients with brittle type 1 diabetes as well as refractory chronic pancreatitis. Despite the vast advancements made in this field, challenges still remain in achieving high frequency and long-term successful transplant outcomes. Here we review recent advances in understanding the role of inflammation in islet transplantation and development of strategies to prevent damage to islets from inflammation. The inflammatory response associated with islets has been recognized as the primary cause of early damage to islets and graft loss after transplantation. Details on cell signaling pathways in islets triggered by cytokines and harmful inflammatory events during pancreas procurement, pancreas preservation, islet isolation, and islet infusion are presented. Robust control of pre- and peritransplant islet inflammation could improve posttransplant islet survival and in turn enhance the benefits of islet cell transplantation for patients who are insulin dependent. We discuss several potent anti-inflammatory strategies that show promise for improving islet engraftment. Further understanding of molecular mechanisms involved in the inflammatory response will provide the basis for developing potent therapeutic strategies for enhancing the quality and success of islet transplantation.