Oxidative stress is a major cause of islet damage and loss during the islet isolation process. The Nrf2 pathway plays a critical role in protecting the cells against oxidative stress. The aim of this study was to investigate the effect of an Nrf2 activator (dh404) on islet isolation and transplantation in a rodent model. Islet isolation was conducted using Nrf2-deficient and wild-type mice and vehicle-treated and Nrf2 activator (dh404)-treated rats. Islet yield, viability, and Nrf2 pathway activity were determined. An in vivo islet potency test was done. Islet yield and viability in Nrf2-deficient mice was significantly lower compared to wild-type (p < 0.05) mice. Furthermore, administration of dh404 to normal Sprague-Dawley rats enhanced nuclear translocation of Nrf2 and elevated HO-1 expression in the pancreas. Islet yield and viability in dh404-treated rats was significantly higher compared to the vehicle-treated group (p < 0.05). The diabetes cure rate in nude mice with chemically induced diabetes was significantly greater in those transplanted with islets from the dh404-treated group (6/9) than vehicle-treated rats (2/9, p < 0.05). The Nrf2 pathway plays a significant role in protecting islets against stress caused by the isolation process. Pharmacological activation of the Nrf2 pathway significantly increased HO-1 expression, improved islet yield, viability, and function after transplantation.