Islet transplantation is an emerging treatment for type 1 diabetes which offers the prospect of physiological control of blood glucose and reductions in acute hypoglycaemic episodes. However, current protocols are limited by a rapid decline in islet functional viability during the isolation process, culture period, and post‐transplantation. Much of this can be attributed to the deleterious effects of hypoxic and cytokine stressors on β cells. One experimental strategy to improve the functional viability of islets is coculture or cotransplantation with mesenchymal stromal cells (MSCs). Numerous studies have shown that MSCs have the capacity to improve islet survival and insulin secretory function, and the mechanisms of these effects are becoming increasingly well understood. In this review, we will focus on recent studies demonstrating the capacity for MSCs to protect islets from hypoxia‐ and cytokine‐induced stress. Islets exposed to acute hypoxia (1%‐2% O2) or to inflammatory cytokines (including IFN‐γ, TNF‐α, and IL‐B) in vitro undergo apoptosis and a rapid decline in glucose‐stimulated insulin secretion. Coculture of islets with MSCs, or with MSC‐conditioned medium, protects from these deleterious effects, primarily with secreted factors. These protective effects are distinct from the immunomodulatory and structural support MSCs provide when cotransplanted with islets. Recent studies suggest that MSCs may support secretory function by the physical transfer of functional mitochondria, particularly to metabolically compromised β cells. Understanding how MSCs respond to stressed islets will facilitate the development of MSC secretome based, cell‐free approaches to supporting islet graft function during transplantation by protecting or repairing β cells.