Microencapsulation is a promising strategy to prolong the survival and function of transplanted pancreatic islets for diabetes therapy, albeit its translation has been impeded by incoherent graft performance. The use of decellularized ECM has lately gained substantial research momentum due to its innate capacity to augment the function of cells originating from the same tissue type. In the present study, the advantages of both these approaches are leveraged in a porcine pancreatic ECM (pECM)-based microencapsulation platform, thus significantly enhancing murine pancreatic islet performance. pECM-encapsulated islets sustain high insulin secretion levels in vitro, surpassing those of islets encapsulated in conventional alginate microcapsules. Moreover, pECM-encapsulated islet cells proliferate and produce an enriched intra-islet ECM framework, displaying a distinctive structural rearrangement. The beneficial effect of pECM encapsulation is further reinforced by the temporary protection against cytokine-induced cytotoxicity. In-vivo, this platform significantly improves glucose tolerance and achieves glycemic correction in 100% of immunocompetent diabetic mice without any immunosuppression, compared to only 50% mice achieved glycemic correction by alginate encapsulation. Altogether, the results presented herein reveal that pECM-based microencapsulation offers a natural pancreatic niche that can restore the function of isolated pancreatic islets and deliver them safely, avoiding the need for immunosuppression. STATEMENT OF SIGNIFICANCE: Aiming to improve pancreatic islet transplantation outcomes in diabetic patients, we developed a microencapsulation platform based on pancreatic extracellular matrix (pECM). In these microcapsules the islets are entrapped within a pECM hydrogel that mimics the natural pancreatic microenvironment. We show that pECM encapsulation supports the islets' viability and function in culture, and provides temporal protection against cytokine-induced stress. In a diabetic mouse model, pECM encapsulation significantly improved glucose tolerance and achieved glycemic correction without any immunosuppression. These results reveal the potential of pECM encapsulation as a viable treatment for diabetes, providing a solid scientific basis for more advanced preclinical studies.