Genetically-engineered pigs offer a possible alternative to deceased human donors as a source of isolated islets for transplantation into patients with life-threatening diabetes. We here consider the advantages and disadvantages of ‘free’ pig islet transplantation into immunosuppressed recipients vs. ‘immunoisolated’ pig islet transplantation into non-immunosuppressed recipients. Although hurdles to successful free pig islet transplantation remain, e.g., the instant blood-mediated reaction (IBMIR) and the immune response, we are optimistic that, as new genetically-engineered pigs become available, the remaining barriers may be overcome. In contrast, we have several concerns with regard to the ultimate success of immunoisolation. Without exogenous immunosuppressive therapy, we suggest that immune injury will occur. If immunosuppressive therapy is required, the primary advantage of encapsulation is lost. A key point is that the lack of adequate nutrition and oxygen to the encapsulated islets has not yet been overcome. Furthermore, an optimal site for the placement of the islets has also not been determined. We also very briefly review several other points of importance to islet xenotransplantation, namely (i) Human leukocyte antigens/Swine leucocyte antigens sensitization, (ii) physiological aspects of pig islet xenotransplantation, (iii) the safety of islet xenotransplantation, and (iv) what will be required to initiate a clinical trial.