The hybrid artificial pancreas for treatment of diabetes consists of insulin-secreting pancreatic tissue which is surrounded by a membrane that protects the tissue from rejection by the immune system following implantation. In this paper, we review the alternative therapeutic approaches for diabetes under study and then discuss the technical requirements that must be met by a hybrid device useful to humans. Previous work on intravascular and extravascular immunoisolation devices is reviewed from the standpoint of these requirements, and three critical unresolved issues are discussed: biocompatibility, oxygen supply limitations, and prevention of immune rejection.