Maintaining long-term euglycemia after intraportal islet transplantation is hampered by the considerable islet loss in the peri-transplant period attributed to inflammation, ischemia and poor angiogenesis. Here, we show that viable and functional islet organoids can be successfully generated from dissociated islet cells (ICs) and human amniotic epithelial cells (hAECs). Incorporation of hAECs into islet organoids markedly enhances engraftment, viability and graft function in a mouse type 1 diabetes model. Our results demonstrate that the integration of hAECs into islet cell organoids has great potential in the development of cell-based therapies for type 1 diabetes. Engineering of functional mini-organs using this strategy will allow the exploration of more favorable implantation sites, and can be expanded to unlimited (stem-cell-derived or xenogeneic) sources of insulin-producing cells.