It has long been the holy grail of cell encapsulation to treat diabetes with insulin producing cells that are shielded from rejection or clearance by the host immune system. Indeed, the idea has been around for more than 50 years with the first demonstration in an animal model being published in 1980 and the first patient treated being reported in 1994. In the meantime, more clinical experience has been accrued with the use of encapsulated cells for the treatment of human diabetes. Most of these studies have focused on the use of alginate as the encapsulation material and although some promising data has been obtained and is reviewed in this article, it is still far from being a product that can be routinely applied. Cellulose sulphate has excellent properties making it ideal for cell encapsulation and has been shown to be safe in 27 patients. Moreover, data has been obtained showing safety and efficacy in a rat model of diabetes supporting that cellulose sulphate might be the material of choice for this application.