Type 1 diabetes is a growing public health concern, and although islet transplantation represents a promising therapeutic approach for insulin dependent diabetes, enhanced availability of islets, alternative approaches for repetitive immunosuppressive therapy, and minimally invasive and safe-harbor transplantation procedures are required for the standardization of this therapy. In this project, we aimed to develop a novel subcutaneous islet transplantation therapy using an engineered immunomodulating and pro-angiogenic nanotechnology to specifically stimulate the vascularization and anti-immune reaction of the transplanted human pluripotent stem cell derived functional islets. We have successfully promoted vascularization by using hyaluronic acid-based hydrogels conjugated with heparin nanoparticle and rhVEGF65 (HA-hcV) in NOD-SCID mice. We have found that encapsulation of pluripotent stem cell derived human islet-like organoids (HILOs) in HA-hcV does not affect glucose-stimulated insulin secretion (GSIS) activity and survival of HILOs in vitro. Transplantation of HA-hcV HILOs shows better outcome for glucose management in NOD-SCID mice at early time point of transplantation. Further we have identified additional conjugation of rhFGF1 in HA-hcV enhances mouse islets survival in C57BL6J. These results provide us the novel insights on dual angiogenic and immunomodulating nanotechnology for subcutaneous stem cell derived islet transplantation for the treatment of diabetes. We further prepared diabetic mice in CD34+ humanized NSG mice, i.e., diabetic mice harboring a long-term surviving human immune system for further studies.