Type 1 diabetes mellitus (T1DM) is characterized by absolute insulin deficiency primarily due to autoimmune destruction of pancreatic β-cells. The prevailing treatment for T1DM involves daily subcutaneous insulin injections, but a substantial proportion of patients face challenges such as severe hypoglycemic episodes and poorly controlled hyperglycemia. For T1DM patients, a more effective therapeutic option involves the replacement of β-cells through allogeneic transplantation of either the entire pancreas or isolated pancreatic islets. Unfortunately, the scarcity of transplantable human organs has led to a growing list of patients waiting for an islet transplant. One potential alternative is xenotransplantation of porcine pancreatic islets. However, due to inter-species molecular incompatibilities, porcine tissues trigger a robust immune response in humans, leading to xenograft rejection. Several promising strategies aim to overcome this challenge and enhance the long-term survival and functionality of xenogeneic islet grafts. These strategies include the use of islets derived from genetically modified pigs, immunoisolation of islets by encapsulation in biocompatible materials, and the creation of an immunomodulatory microenvironment by co-transplanting islets with accessory cells or utilizing immunomodulatory biomaterials. This review concentrates on delineating the primary obstacles in islet xenotransplantation and elucidates the fundamental principles and recent breakthroughs aimed at addressing these challenges.