To circumvent pancreatic islet graft-directed immune destruction we enveloped porcine islets within highly biocompatible and selectively permeable algin/polyaminoacid microcapsules. These special microspheres were deposited between the inner (permeable) and the outer (impermeable) layers of an artificial, coaxial vascular prosthesis, directly anastomized to blood vessels. Five dogs with spontaneous, insulin-dependent diabetes received microencapsulated porcine islets in arterio-vein iliac prosthesis by-passes. One showed complete and the remainder partial, sustained reversal of hyperglycemia. Microencapsulation may be a potential solution to immunological problems related to islet transplantation.