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Transplantation of stem cell–derived β (SC-β) cells represents a promising therapy for type 1 diabetes (T1D). However, the delivery, maintenance, and retrieval of these cells remain a challenge. Here, we report the design of a safe and functional device composed of a highly porous, durable nanofibrous skin and an immunoprotective hydrogel core. The device consists of electrospun medical-grade thermoplastic silicone-polycarbonate-urethane and is soft but tough (~15 megapascal at a rupture strain of >2). Tuning the nanofiber size to less than ~500 nanometers prevented cell penetration while maintaining maximum mass transfer and decreased cellular overgrowth on blank (cell-free) devices to as low as a single-cell layer (~3 micrometers thick) when implanted in the peritoneal cavity of mice. We confirmed device safety, indicated as continuous containment of proliferative cells within the device for 5 months. Encapsulating syngeneic, allogeneic, or xenogeneic rodent islets within the device corrected chemically induced diabetes in mice and cells remained functional for up to 200 days. The function of human SC-β cells was supported by the device, and it reversed diabetes within 1 week of implantation in immunodeficient and immunocompetent mice, for up to 120 and 60 days, respectively. We demonstrated the scalability and retrievability of the device in dogs and observed viable human SC-β cells despite xenogeneic immune responses. The nanofibrous device design may therefore provide a translatable solution to the balance between safety and functionality in developing stem cell–based therapies for T1D.