The destruction of insulin-producing cells is a hallmark of Type 1 diabetes (T1D) and results in a loss of glycemic control. Islet transplantation can restore glucose homeostasis and prevent hypoglycemic events; however, long-term graft survival is low due to a proinflammatory environment mediated by islet-infiltrating immune cells generating damaging free radicals. Therefore, suppressing free radicals with nanothin encapsulation materials comprised of alternating layers of tannic acid (TA), an immunomodulatory antioxidant, and poly(N-vinylpyrrolidone) (PVPON), a scaffold polymer, may allow for improved graft survival. We hypothesize that (PVPON/TA)-encapsulation of islets will prolong graft function and delay allotransplantation rejection in the absence of systemic immunosuppression. We recently published that allogeneic transplantation of encapsulated C57BL/6 islets into NOD mice significantly delayed graft failure, decreased free radical-adduct formation, and reduced infiltrating immune cell effector responses. Mechanistically, (PVPON/TA)-encapsulation reduced STAT1 and increased STAT6 activation within macrophage populations, suggesting that our antioxidant encapsulation material may be eliciting an anti-inflammatory M2 macrophage fate. Since (PVPON/TA) coatings are modifiable, the immunosuppressive capacity was enhanced by conjugating CTLA-4-Ig to the outer layer. Transplantation of (PVPON/TA/CTLA-4)-encapsulated NOD.Rag islets into diabetic C57BL/6 mice significantly delayed allograft rejection from an average of 40 days to 120 days (3-fold) when compared to (PVPON/TA) controls. Flow cytometry analysis demonstrated reduced CD80/CD86 costimulatory receptor and MHC-II expression on innate immune populations, enhanced FOXP3⁺ regulatory T cells, and enhanced PD1⁺ CD8 T cells within (PVPON/TA/CTLA-4)-encapsulated grafts. To examine the in vivo integrity of (PVPON/TA) layers, the addition of a Cy5.5 fluorophore to (PVPON/TA/Cy5.5)-encapsulated islets was detectable for up to eight weeks post-transplant. These data suggest localized immunosuppression with (PVPON/TA)-encapsulation materials may be a promising technique to prolong islet graft function in islet allotransplants. The ability to modify our (PVPON/TA) coatings opens the door for endless possibilities to improve clinical islet transplantation.