Pancreatic islet transplantation can replace insulin-secreting beta cells in patients with diabetes mellitus. However, current methodology for isolating islets from a pancreas only retrieves a portion of the total islets. Within these limited number of islets, nearly 50% of beta cells lose biological function before transplantation. Protecting and improving beta-cell viability and function was the goal of this study. Previously we observed that an anti-inflammatory compound, lisofylline (LSF), protects beta cells from cytotoxicity during diabetes development. In this study, we demonstrated that human islets treated in vitro with LSF retained beta-cell glucose responsiveness and insulin secretion in the presence of multiple proinflammatory cytokines. In addition, LSF treatment in vitro enhanced basal insulin production in beta cells, suggesting that LSF can directly improve beta-cell function. LSF reduced beta-cell apoptosis induced by proinflammatory cytokines by 50%. Importantly, 30% fewer LSF-treated islets were sufficient to achieve insulin independence in a murine islet transplantation model. These results demonstrate the ability of LSF-like compounds to protect and enhance beta-cell function, suggesting the potential of using LSF or its analogs in islet transplantation.