Abstract Pancreatic islet transplantation is an attractive option for treatment of type 1 diabetes mellitus but maintaining long term islet function remains challenging. Mesenchymal stromal cells (MSCs), derived from bone marrow or other sources, are being extensively investigated in the clinical setting for their immunomodulatory and tissue regenerative properties. Indeed, MSCs have been already tested in some feasibility studies in the context of islet transplantation. MSCs could be utilized to improve engraftment of pancreatic islets by suppressing inflammatory damage and immune mediated rejection. In addition to their immunomodulatory effects, MSCs are known to provide a supportive microenvironmental niche by secreting paracrine factors and depositing extracellular matrix. These properties could be used for in vivo co-transplantation to improve islet engraftment, or for in vitro co-culture to prime freshly isolated islets prior to implantation. Further, tissue specific pancreatic islet derived MSCs may open new opportunities for its use in islet transplantation as those cells might be more physiological to pancreatic islets.