Objective Islet microencapsulation is an attractive strategy to minimize or avoid life-long immunosuppression after transplantation. However, reversal of diabetes by microencapsulated islets has not been described in large animal. Preclinical study in large animal has been required for clinical application of encapsulated islets in human. Methods In this study, we note the successful cure of diabetes by the transplantation of immunoprotected allogenic islets. Six insulin-dependent diabetic beagle dogs were induced by the pancreatectomy. Four diabetic dogs were intraportally received allogenic islets (15,000 IE/kg) from mongrel dogs, which were shown short-term euglycemia. We used chitosan coated alginate capsule for microencapsulation. Transplantable islets were isolated from mongrel dogs and purified by OPTIPREP-based gradient using COBE2991 and were immunoprotected by microencapsulation technique. Results Two insulin-dependent diabetic beagle dogs were received immunoprotected islets (50,000 IE/kg) without any immune-suppressive regimen. In all two microencapsulated islet recipients, euglycemia was achieved within 7 days after transplantation. IV-GTT was performed at 14 days after transplantation demonstrated normalization of AUCg values. In addition, serum c-peptide level was increased at that time. All animals receiving immunoprotected islets remained insulin-independent euglycemia for 30~76 days. Conclusion In conclusion, we demonstrated the graft function of immunoprotected allogenic islets in diabetic large animals which is preclinical data for the treatment of diabetes in human.