Islet transplantation is a promising treatment for type 1 diabetes (T1D), yet the low donor pool, poor islet engraftment, and life-long immunosuppression prevent it from becoming the standard of care. Human embryonic stem cell (hESC)-derived pancreatic cells could eliminate donor shortages, but interventions to improve graft survival are needed. Here, we enhanced subcutaneous engraftment by employing a unique vascularization strategy based on ready-made microvessels (MVs) isolated from the adipose tissue. This resulted in improved cell survival and effective glucose response of both human islets and hESC-derived pancreatic cells, which ameliorated preexisting diabetes in three mouse models of T1D. Keywords: beta cells; embryonic stem cells; endothelial cells; islet transplantation; microvessels; pancreatic progenitors; regenerative medicine; subcutaneous; type 1 diabetes; vascularization.