Insulin-like growth factor-II (IGF-II) has been shown to promote pancreatic β-cell survival. We evaluated the effect of co-encapsulating islets and bioengineered IGF-II-producing cells on islet cell survival. IGF-II or green fast protein (GFP) genes were transferred into TM4 cells, and purified using a neomycin resistance gene, leading to pure cell cultures (TM4-IGF-II or TM4-GFP) with a stable overexpression of the transferred gene. Islets were co-encapsulated with TM4-IGF-II or TM4-GFP, or encapsulated alone in alginate microcapsules. Rat and mouse islet cell survival was studied in vitro and in vivo, respectively. After 12 days in culture, islet viability (dual staining, acridine orange/propidium iodide) was 83% with TM4-IGF-II, compared with 51% (P<0.05) and 41% (P<0.001) with TM4-GFP and islets alone, respectively. The study of islet necrotic centers and the evaluation of islet function, using the MTS (3-(4,5-dimethylthiazol-2-yl)-5-(3-carboxymethoxyphenyl)-2-(4-sulfophenyl)-2H-tetrazolium, inner salt) assay, yielded similar results. From 125 days after transplantation, more diabetic mice maintained normoglycemia when they were transplanted with islets co-encapsulated with TM4-IGF-II (4/7). A significant difference for the maintenance of normoglycemia was observed between recipients of islets co-encapsulated with TM4-IGF-II versus islets alone (P=0.023), or with TM4-GFP (P=0.048). In conclusion, the co-encapsulation of islets with bioengineered IGF-II-producing cells promotes islet cell survival.