Transplantation of pancreatic islets is a promising strategy for restoring insulin secretion in diabetes mellitus. To monitor transplanted islets, a method to evaluate the distribution in a non-invasive manner in vivo is needed. INS-1E, a stable differentiated insulin secreting cell line, and rodent islets were used to monitor cell transplantation by MRI. For labeling INS-1E cells in vitro, increasing concentrations of Resovist in culture medium were tested. For MR imaging in a clinical 3T scanner, we placed a layer of labeled INS-1E cells between two layers of 4% gelatin. Viability assay was performed. Cell function was evaluated by static incubation assay to assess insulin secretion. For in vivo imaging, iron labeled rodent islets were transplanted into the liver of streptozotocin induced diabetic rats and visualized by MRI. Blood sugar values were controlled and liver tissue was removed for histological analysis. SPIO labeled INS-1E cells did not show altered viability or reduced glucose stimulated insulin secretion in vitro. Double staining of labeled and unlabeled INS-1E cells showed no difference in the staining pattern. Labeling of rodent islets with SPIOs does not reduce their secretory activity or alter their viability. We visualized SPIO-labeled INS-1E cells and rat islets in vitro using a clinical 3T scanner. Diabetic rats transplanted with SPIO-labeled islets became normoglycemic. MR imaging successfully verified the distribution of labeled transplanted cells in vivo. Labeling INS-1E cells and rat islets with SPIOs does not alter their viability, while enabling MR imaging of labeled cells in vitro and within the living organism.