We newly developed a sheet-type macroencapsulation device entrapping rat islets from 3% polyvinyl alcohol (PVA) dissolved in Euro-Collins solution containing 10% fetal bovine serum and 5% dimethyl sulfoxide (PVA + EC) using a freezing/thawing technique. The same encapsulation technique but with 3% PVA dissolved only in double-distilled water (PVA) and a culture of free islets were served as controls. After 14-day culture in the CMRL-1066 medium, the islet recovery rate, morphological changes, insulin content, and insulin secretion were evaluated in vitro to prove the feasibility of this method of encapsulation. We also xenotransplanted the device into the peritoneal cavity of diabetic C57BL/6 mice to check its function in vivo. After 1-day culture, the islet recovery rate and insulin content in the PVA group were significantly lower than that in the PVA + EC and free islet groups. After 14-day culture, only the islets in the PVA+EC group maintained a normal morphology and effective insulin secretory response to high glucose while the response was not observed in the PVA group after 1-day culture and no longer observed in the free islets after 7-day culture. After transplantation of rat islets encapsulated in the PVA + EC device to diabetic C57BL/6 mice, nonfasting blood glucose levels showed a rapid decrease from high glucose levels of pre-transplantation, maintaining significantly lower glucose levels during the whole course of study in comparison with the sham-operated group. Our results indicated that this freezing/thawing macroencapsulation technique using 3% PVA + EC was effective for xenotransplantation of islet cells.