A significant proportion of islets are lost following transplantation due to hypoxia and inflammation. We hypothesize that adipose tissue-derived mesenchymal stem cells (AD-MSCs) can rescue a sub-therapeutic number of transplanted islets by helping them establish a new blood supply and reducing inflammation. Diabetic mice received syngeneic transplantation with 75 (minimal), 150 (sub-therapeutic), or 225 (therapeutic) islets, with or without 1 × 106 mouse AD-MSCs. Fasting blood glucose (FBG) values were measured over 6weeks with tissue samples collected for islet structure and morphology (H&E, insulin/glucagon staining). Histological and immunohistochemical analyses of islets were also performed at 2weeks in animals transplanted with a sub-therapeutic number of islets, with and without AD-MSCs, to determine new blood vessel formation, the presence of pro-angiogenic factors facilitating revascularization, and the degree of inflammation. AD-MSCs had no beneficial effect on FBG values when co-transplanted with a minimal or therapeutic number of islets. However, AD-MSCs significantly reduced FBG values and restored glycemic control in diabetic animals transplanted with a sub-therapeutic number of islets. Islets co-transplanted with AD-MSCs preserved their native morphology and organization and exhibited less aggregation when compared to islets transplanted alone. In the sub-therapeutic group, AD-MSCs significantly increased islet revascularization and the expression of angiogenic factors including hepatocyte growth factor (HGF) and angiopoietin-1 (Ang-1) while also reducing inflammation. AD-MSCs can rescue the function of islets when transplanted in a sub-therapeutic number, for at least 6weeks, via their ability to maintain islet architecture while concurrently facilitating islet revascularization and reducing inflammation.