Islets were microencapsulated in agarose gel for examination of the possible use of microencapsulated islets as a bioartificial pancreas. Microencapsulated islets secreted insulin into the culture medium (RPMI-1640) and could rapidly increase their insulin release in response to a glucose challenge even after greater than 100 days. Hamster islets in groups of 400-1000 encapsulated in microbeads containing 11-14% (wt/wt) agarose were xenogenically transplanted into the peritoneal cavity of five diabetic mice. The longest normoglycemic period in these mice was 53 days, which was markedly longer than the normoglycemic period obtained by nonencapsulated islets. Agarose seems to be a suitable basic material for encapsulating islets, because the islets can easily be microencapsulated without any adverse effect on the islet function.