Thalidomide is an immunomodulator that possesses both anti-inflammatory and anti-angiogenic properties. This study is designed to investigate its potential therapeutic application in islet transplantation with an established islet xeno-transplantation model. Islet transplantation was performed using C57Bl/6 mice and NMRI nu/nu mice as recipients of porcine islets. Blood glucose levels were continuously monitored. Islet graft mass and revascularization was determined at the end of the experiment. In an immunocompetent environment, a fast graft rejection was observed in the vehicle C57Bl/6 group and these mice died because of severe diabetes. In the group treated with thalidomide 200 mg/kg BW per day, mice achieved and maintained euglycemia in the whole observation period for 42 days. The treated mice had more functional islet graft mass (graft insulin content in ug /mg protein: 20.630.82 vs 3.080.57, p<0.01) with less leukocyte infiltration (MPO activity in graft in mU/ml: 5.00.7 vs 8.41.2, p<0.01). The proinflammatory TNFa content in islet graft was lowered by the treatment (ng/mg protein: 659 vs 24312, p<0.01). By comparison, thalidomide was not effective in improving graft survival in immunocompromised nude mice due to impairment of the revascularization process. In an ex vivo islet sprouting assay, thalidomide strongly inhibited the vascular endothelial growth factor (VEGF) or TNFa induced sprout formation of isolated pig islets in a dose dependent manner. In conclusion, the anti-inflammatory effect of thalidomide improved islet graft survival in a xenogenic environment.