The success of islet transplantation in the treatment of type 1 diabetes has been limited by the progressive decline in islet function and viability during isolation and post transplantation. The aims of the current study were to investigate the capacity of a multifunctional progenitor cell type, mesenchymal stromal cells (MSCs), to improve islet insulin secretory function and viability after exposure to transplantation relevant stressors. Mouse islets were cultured with low (IL-1β, 1 ng/ml; TNF-α, 5 ng/ml; IFN-γ; 5 ng/ml) or high (IL-1β, 20 ng/ml; TNF-α, 100 ng/ml; IFN-γ, 100 ng/ml) concentrations of mixed cytokines 24 h or incubated in hypoxic conditions (1% O2) for 16 h before being cultured with mouse bone marrow-derived MSCs for a further 48 h. Exposure to hypoxia significantly reduced glucose-stimulated insulin secretion (GSIS) (P<0.01) and islet cell viability (P<0.05). Co-culture of islets with MSCs did not rescue GSIS but did prevent the hypoxia-induced reduction in cell viability (P<0.01). Preculturing islets with low concentrations of cytokines did not affect islet cell viability but significantly reduced GSIS (P<0.001), which was partially restored by co-culture with MSCs (P<0.05). Preculturing islets with higher concentrations of cytokines induced a significant decrease in cell viability (P<0.01) which was prevented by co-culture with MSCs (P<0.01). Higher concentrations of cytokines also increased insulin release at both basal and stimulatory concentrations of glucose (P>0.01), most likely due to β-cell damage since this insulin release was reduced by MSC co-culture in parallel to the improved islet cell viability. These data demonstrate that MSCs can protect islets against hypoxia and cytokine-induced cell death and partially rescue cytokine-induced changes in insulin secretory function. Understanding the mechanisms behind these beneficial effects may allow the development of a cell-free approach to supporting isolated islets and improving clinical islet transplantation protocols.