Tremendous advances have been made over the past several years in the development of diverse biocompatible materials and structural designs for the implantation of immunoisolated cells and tissues. This area of bioengineering has clear application to insulin-dependent diabetes for which the implantation of micro- or macroencapsulated pancreatic islets or surrogate beta cells has great potential therapeutic benefit. This discussion concentrates on three antigen-specific immunologic processes that impede the application of islet transplantation as a therapy for insulin-dependent diabetes: (1) Allograft immunity, (2) Xenograft immunity, and (3) Autoimmune pathogenesis of Type I diabetes. Special emphasis is placed on the potential impact of these immune pathways on immunoisolated tissues.