Macrophage activation contributes to islet graft loss after transplantation by secretion of proinflammatory cytokines. We showed in previous studies that treatment with alpha-1 antitrypsin (AAT) improved human islet survival after transplantation into the livers of streptozotocin-induced diabetic NOD-SCID mice. To further understand the cellular targets of AAT, we isolated macrophages from control or AAT-treated recipients at day 1 post transplantation (PT) and compared their mRNA profile using RNAseq analysis. 344 genes were changed in AAT-treated recipients compared to controls. Clusters of the inflammatory response, chemokine activity and cytokine and cytokine receptor Gene Otology categories and pathways were significantly affected by AAT-treatment. In vitro, AAT suppressed IFN-γ-induced Raw267.4 cell activation via suppression of STAT1 phosphorylation and iNOS production. This was translated in vitro when human islets were co-transplanted with IFN-γ-treated Raw cells, in the presence or absence of AAT, into diabetic NOD-SCID mice in which macrophages were depleted by liposome. At day 21, all macrophage-depleted diabetic recipients receiving islets alone achieved normoglycemia (n=6). In contrast, only 55.6% (n=9, p=0.001) receiving islets and IFN-γ-treated Raw cells achieved normoglycemia, compared to 90% receiving AAT-treated IFN-γ Raw cells (n=10, p=0.003), suggesting AAT improved islet graft survival via suppressing macrophage activation. The effect of AAT was further confirmed in a major mismatch allogeneic islet transplantation model (Balb/c, H-2b to C57BL/6 H-2d mice) in which macrophage activation contributed to primary nonfunction (PNF) of the transplanted islets. In this model, PNF occurred in 16.7% of AAT-treated recipients (n=6) but in 40% of controls (n=5) when 400 islets were transplanted. In summary, this study further identified that AAT contributed to islet graft survival after transplantation by suppressing macrophage activation. Disclosure W. Gou: None. C. Strange: None. H. Wang: None. Funding National Institutes of Health (DK105183, DK120394, DK118529)