Type 1 diabetes (T1D) is characterized by uncontrolled levels of glucose (sugar) in the blood and is caused by destruction of the insulin-producing beta cells within the pancreas. The holy grail of T1D treatment is the restoration of continuous, autonomous blood sugar control to patients with T1D without the need for the administration of injected insulin.  One way to achieve this goal is to replace the beta cells that have been destroyed by the disease process; however, replacing beta cells is not necessarily synonymous with restoring blood sugar levels.  In the body, beta cells exist in a highly specialized niche characterized by close-range interactions with multiple other cells types.  In order to restore physiologic glucose homeostasis, it will likely be necessary to not only replace the beta cells themselves, but also to maintain these cells in an environment that is supportive of their function. In this work, we have developed a strategy to generate engineered islets, which contain human embryonic stem cell (hESC)-derived beta-like cells along with key cellular components of the beta cell niche. Using transcriptional and functional readouts, we have empirically determined the optimal composition of engineered islets, then used screening approaches to define key pathways underlying the mechanism of niche-induced maturation of hESC-derived beta-like cells. Lastly, we have demonstrated physiological function of engineered islets when implanted into immunodeficient animals, in both non-diabetic and diabetic contexts. Future studies are being conducted to confirm the survival, engraftment, and functional properties of engineered islets when implanted in devices that protect them from immune attack by the recipient’s immune system.