Islet transplantation for the purpose of treating insulin-sensitive diabetes is currently limited by several factors, including islet survival posttransplantation. In the current study, a tissue-engineered prevascularized pancreatic encapsulating device (PPED) was developed. Isolated islets were placed in collagen gels, and they exhibited fourfold more insulin release than islets not in collagen. The insulin released by beta-cells in islets encapsulated in collagen exhibited unobstructed diffusion within the collagen gels. Subsequent studies evaluated the ability to create a sandwich comprised of two layers of prevascularized collagen gels around a central collagen gel containing islets. In vitro characterization of the islets showed that islets are functional and responded to glucose stimulation. The PPEDs were implanted subcutaneously into severe combined immunodeficient mice. Islet survival was assessed after 7, 14, and 28 days. Immunohistochemical analysis was performed on the implants to detect insulin and the presence of intraislet endothelial cells. At all time points, insulin was localized in association with intact and partially dissociated islets. Moreover, cells that exhibited insulin staining were colocalized with intraislet endothelial cells. These data indicate that the PPED enhances islet survival by supporting islet viability and maintaining intraislet endothelial cell structures.