The subcutaneous space is a potential site for clinical islet transplantation. Even though there are several advantages, poor blood supply at this site mainly causes failure of islet survival. In this study, angiogenesis was induced in advance at the diabetic rats subcutis for islet transplantation by implanting a polyethylene terephthalate (PET) mesh bag containing gelatin microspheres incorporating basic fibroblast growth factor (bFGF) (MS/bFGF) and a collagen sponge. The bFGF was incorporated into gelatin microspheres for controlled release of bFGF. As controls, a PET mesh bag with or without either colla,pn sponges or MS/bFGF was implanted at the subcutaneous site of diabetic rats. Macroscopic and microscopic examinations revealed the formation of capillary network in and around the PET mesh bag containing MS/bFGF and collagen sponges 7 days after implantation when compare with other control groups. When tissue hemoglobin level was also measured, a significantly high level of hemoglobin amount was observed compared with that of control groups. When allogeneic islets mixed with 5% agarose were transplanted into the prevascularized rat subcutis, normoglycemia was maintained for more than 40 days, while other control groups were ineffective. This study demonstrated that combination of gelatin microspheres incorporating bFGF and collagen sponges enabled the mesh to induce neovascularization even at the subcutaneous site of streptozotocin-induced diabetic rats, resulting in improved function of islet transplantation.