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Two major hurdles need to be surmounted for cell therapy for diabetes: (i) allo-immune rejection of grafted pancreatic islets, or stem/precursor cell-derived insulin-secreting cells; and (ii) continuing auto-immunity against the diabetogenic endogenous target antigen. Nanotherapeutics offer a novel approach to overcome these problems and here we ask if creation of “stealth” islets encapsulated within a thin cage of pegylated material of 100–200 nanometers thick provides a viable option for islet transplantation. The aims of this study were to test islet viability and functionality following encapsulation within the pegylated cage, and functional efficacy  in vivo  in terms of graft-derived control of normoglycemia in diabetic mice. We first demonstrated that pegylation of the islet surface, plus or minus nanoparticles, improved long-term islet viability  in vitro  compared to non-pegylated (naked) control islets. Moreover, pegylation of the islets with nanoparticles was compatible with glucose-stimulated insulin secretion and insulin biogenesis. We next looked for functionality of the created “stealth” DBA/2 (H-2 d ) islets  in vivo  by comparing glycemic profiles across 4 groups of streptozotozin-induced diabetic C57BL/6 (H-2 b ) recipients of (i) naked islets; (ii) pegylated islets; (iii) pegylated islets with nanoparticles (empty); and (iv) pegylated islets with nanoparticles loaded with a cargo of leukemia inhibitory factor (LIF), a factor both promotes adaptive immune tolerance and regulates pancreatic β cell mass. Without any other treatment, normoglycemia was lost after 17 d (+/−7.5 d) in control group. In striking contrast, recipients in groups (ii), (iii), and (iv) showed long-term (>100 d) normoglycemia involving 30%; 43%, and 57% of the recipients in each respective group. In conclusion, construction of “stealth” islets by pegylation-based nanotherapeutics not only supports islet structure and function, but also effectively isolates the islets from immune-mediated destruction. The added value of nanoparticles to deliver immune modulators plus growth factors such as LIF expands the potential of this novel therapeutic approach to cell therapy for diabetes.

Immuno-Isolation of Pancreatic Islet Allografts Using Pegylated Nanotherapy Leads to Long-Term Normoglycemia in Full MHC Mismatch Recipient Mice