A bioartificial pancreas, that is, transplantation of islets of Langerhans (islets) which are enclosed in a semipermeable membrane, has been proposed as a treatment for type I diabetes. The islets are immuno-isolated from the host by the semipermeable membrane preventing rejection while maintaining control of glucose metabolism for an extended period. The purpose of the current research is to evaluate the feasibility of preparing agarose microbeads with xenogeneic hamster islets as a bioartificial pancreas in streptozotocin induced diabetic mice. In the recipients with a low level of anti-hamster antibodies, the combination of encapsulation of hamster islets in 5% agarose microbeads and in vitro culture of them prolonged xenograft survivals. Four of 6 recipients were still normoglycemic at 100 days after implantation. However, the same procedure was not effective in the recipients which were sensitized in advance by transplantation of free hamster islets and thus had high levels of anti-hamster antibodies. The average normoglycemic period was 32 days. Antibodies permeated through the microbeads and activated complement on the cell surfaces. The network of agarose microbeads was rendered dense by increasing the concentration of agarose to restrict the diffusion of antibodies. Graft survivals were prolonged with increasing concentrations of agarose. As an analysis using diffusion equations predicted, the survivals were inversely proportional to the diffusion coefficient of IgG in each agarose gel. Islet xenotransplantation was enabled by the combination of the microbeads with a concentration of agarose higher than 7.5% and in vitro culture even in recipients having a high level of preformed antibodies.