Despite recent successes in islet transplantation, current immunosuppression protocols required to prevent graft rejection are not suitable for all patients. As a consequence, microencapsulation of islets in alginate has been proposed to protect islets from immune-mediated destruction. Success has been limited, however, due largely to problems with alginate biocompatibility and insufficient immunoprotection by the capsule. The aim of this study was to develop a purified, highly biocompatible, and highly stable alginate from commercially available alginate. We analyzed the chemical properties of the alginate before and after purification and compared in vivo survival and metabolic function of mouse islets encapsulated with either alginate in syngeneic recipients. Recipients of purified alginate capsules exhibited a 105-day graft survival rate of 90.5%, versus 69.2% for recipients of nonpurified alginate, with recipients of purified alginate capsules also showing improved nonfasting blood glucose levels and oral glucose challenges over recipients of nonpurified alginate. On recovery, islets encapsulated in purified alginate capsules demonstrated dramatically reduced capsular overgrowth, and an insulin secretory activity far superior to that of islets in nonpurified alginate capsules. We conclude from this study that alginate purification improves the survival and metabolic function of encapsulated islets. To our knowledge, this is the first paper using pre- and postmodification alginate to demonstrate the direct benefit of purification on transplantation success of islets in simple, open-pore capsules.