One strategy to prevent islet rejection is to create a favorable immune-protective local environment at the transplant site. Herein, we utilize localized cyclosporine A (CsA) delivery to islet grafts via poly(lactic-co-glycolic acid) (PLGA) microparticles to attenuate allograft rejection. CsA-eluting PLGA microparticles were prepared using a single emulsion (oil-in-water) solvent evaporation technique. CsA microparticles alone significantly delayed islet allograft rejection compared to islets alone (p + and CD8+ cells, p + cells, p IL-6, IL-10, INF-γ, and TNF-α; p CCL2, CCL5, CCL22, and CXCL10; p + and intra-graft FoxP3+ T regulatory cells. The rapid rejection of third-party skin grafts (C3H) in islet allograft recipients suggests that CsA microparticles + CTLA4-Ig therapy induced operational tolerance. This study demonstrates that localized CsA drug delivery plus short-course systemic immunosuppression promotes an immune protective transplant niche for allogeneic islets.