Diabetes mellitus is one of the leading metabolic diseases that cause an increasing rate of mortality and morbidity. Recently, rather than the current drug treatment, pancreatic islet transplantation has been regarded as a potentially promising strategy for insulin- dependent diabetes mellitus while preventing complications such as kidney damage, vascular damage, nerve damage, and blindness. Recently, a number of advanced islet encapsulation techniques have been designed to enhance the efficiency of islet transplantation, including cell sheet engineering and generation of 3D islet spheroids by high density suspension system (HDSS). Chondrocytes derived from cartilage sources have been used as an encapsulation biomaterial for islets not only for autograft but also for allograft and xenograft transplantation. Cartilage is an avascular, white connective tissue that is rich in extracellular matrix, and expandable in vitro. Hence, this tissue might have immunologically privileged properties that make it an intelligent cell source for manufacture of encapsulation biomaterials. However, cell sheet engineering and HDSS still have their respective limitations, which need to be elucidated. This review will describe the advantages and disadvantages of the current encapsulation techniques in order to provide a comprehensive foundation for further modifications and improvements of tissue engineering for islet transplantation.