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Islet cell transplantation has therapeutic potential to treat type 1 diabetes, which is characterized by autoimmune destruction of insulin-producing pancreatic islet β cells. It represents a minimal invasive approach for β cell replacement, but long-term blood control is still largely unachievable. This phenomenon can be attributed to the lack of islet vasculature and hypoxic environment in the immediate post-transplantation period that contributes to the acute loss of islets by ischemia. Moreover, graft failures continue to occur because of immunological rejection, despite the use of potent immunosuppressive agents. Mesenchymal stem cells (MSCs) have the potential to enhance islet transplantation by suppressing inflammatory damage and immune mediated rejection. In this review we discuss the impact of MSCs on islet transplantation and focus on the potential role of MSCs in protecting islet grafts from early graft failure and from autoimmune attack.