The justification for pancreatic or islet transplantation in diabetes mellitus is to halt progression of diabetic vascular complications. Although this goal has so far not been achieved, technical progress in transplanting the whole or segmental, vascularized pancreas has been remarkable. However, the operation is complicated and not without risk; immune rejection is furthermore a major problem, and the availability of suitable organs is limited. Transplantation of isolated pancreatic islet grafts, i.e. isolated islets or fetal pancreas, has therefore emerged as an attractive alternative. Iso-, allo- or xenografts of such preparations have been found to reverse diabetes in experimental animals. Only a minor operation is required and islets, although highly immunogenic, may be accessible to immunomodulation in vitro in order to decrease or abolish the allograft rejection and prevent cells from becoming targets for the autoimmune assault. However, problems and difficulties have emerged in this context also. Thus, islets are extremely difficult to isolate from the adult human pancreas. Such glands, be they adult or fetal, are not easily available, and clinical trials have so far remained without documented success. Considerable efforts are being made to overcome the difficulties encountered in islet transplantation. Attempts are being made to improve the techniques for preparation of clean and viable islets and to understand critical factors in the cellular interactions between the graft and the host after transplantation. Factors of importance in this context are the nutritional requirements of the graft and the vascularization process at the site of implantation. In order to provide unlimited access to cells with a high potential for insulin production and adaptive growth in the diabetic recipient, ongoing research is also directed towards methods for preparation of porcine fetal and adult islets suitable for xenotransplantation. The obvious problems involved in immune rejection of the grafted tissue are being investigated with respect both to the possibility of immunomodulation of the graft in vitro, the design of new immunosuppressive drugs, and the possibility of immuno-isolation of the insulin-producing cells with the aid of artificial membranes.