Transplantation of encapsulated islets can cure diabetes without immunosuppression, but oxygen supply limitations can cause failure. We investigated a retrievable macroencapsulation device wherein islets are encapsulated in a planar alginate slab and supplied with exogenous oxygen from a replenishable gas chamber. Translation to clinically-useful devices entails reduction of device size by increasing islet surface density, which requires increased gas chamber pO2. Here we show that islet surface density can be substantially increased safely by increasing gas chamber pO2 to a supraphysiological level that maintains all islets viable and functional. These levels were determined from measurements of pO2 profiles in islet-alginate slabs. Encapsulated islets implanted with surface density as high as 4,800 islet equivalents/cm3 in diabetic rats maintained normoglycemia for more than 7 months and provided near-normal intravenous glucose tolerance tests. Nearly 90% of the original viable tissue was recovered after device explantation. Damaged islets failed after progressively shorter times. The required values of gas chamber pO2 were predictable from a mathematical model of oxygen consumption and diffusion in the device. These results demonstrate feasibility of developing retrievable macroencapsulated devices small enough for clinical use and provide a firm basis for design of devices for testing in large animals and humans.