One approach to insulin replacement therapy is transplantation of islets of Langerhans immunoisolated from host tissue by a semipermeable membrane. In this state, islets depend on diffusion of nutrients and wastes to and from the beta-cell to provide a suitable environment for survival and secretion. A perifusion system was constructed to test glucose-stimulated (100-300 mg/100 ml) insulin secretion from whole islets, or small (5-10 cell) aggregates, under controlled pO2. First phase insulin secretion from adult rat islets was unaffected by hypoxic levels of pO2, but second phase secretion was rapidly reduced at pO2 levels below 60 mmHg in the bulk media. Secretion from single-cell aggregates was unaffected until pO2 levels dropped to 12 mmHg, at which point secretion progressively decreased with falling pO2. A theoretical reaction/diffusion model was developed to correlate intraislet pO2 with reduced insulin secretion. Oxygen limited secretion was reversible, and not a result of decreased cell viability, as ascertained by both long-term static culture and trypan blue staining. Insulin secretion is more sensitive to hypoxia than is cell viability, in part because O2 uptake increases with glucose stimulation. These results indicate that O2 may be the limiting factor in the ability of immunoisolated islets to respond to blood glucose changes. We conclude that maintenance of a sufficiently high islet pO2 for maximal insulin secretion may be an important issue for graft design and implant site selection.