Transplantation of encapsulated porcine islets is proposed to treat type 1 diabetes. However, the envelopment of fibrous tissue and the infiltration of immune cells impair islet function and eventually cause implant failure. It is known that hemodialysis using an ethylene vinyl alcohol (EVOH) membrane results in minor tissue responses. Therefore, we hypothesized that using a low-adhesive EVOH membrane for encapsulation may prevent host cell accumulation and fibrous capsule formation. In this study, rat islets suspended in chitosan gel were encapsulated in bags made from highly porous EVOH membranes, and their in vitro insulin secretion function as well as in vivo performance was evaluated. The results showed that the EVOH bag did not affect islet survival or glucose-stimulated insulin secretion. Whereas naked islets were dysfunctional after 7 days of culture in vitro, islets within the EVOH bag produced insulin continuously for 30 days. Streptozotocin-induced diabetic mice were given islets-chitosan gel-EVOH implants intraperitoneally (650-800 islets equivalent) and exhibited lower blood glucose levels and regained body weight during a 4-week observation period. The transplanted mice had higher levels of serum insulin and C-peptide, with an improved blood glucose disappearance rate. Retrieved implants had minor tissue adhesion, and histology showed a limited number of mononuclear cells and fibroblasts surrounding the implants. No invasion of host cells into the EVOH bags was noticed, and the encapsulated islets were intact and positive for insulin-glucagon immunostaining. In conclusion, an EVOH bag can protect encapsulated islets, limit fibrous capsule formation, and extend graft function.