Islet transplantation is a promising therapeutic approach for type 1 diabetes. However, current success rates are low due to progressive graft failure in the long term, and inability to monitor graft development in vivo. Other limitations include the necessity of initial invasive surgery and continued immunosuppressive therapy. We report an alternative transplantation strategy with the potential to overcome these problems. This technique involves transplantation of embryonic pancreatic tissue into recipients' subcutaneous space, eliminating the need for invasive surgery and associated risks. Current results in mouse models of type 1 diabetes show that embryonic pancreatic transplants in the subcutaneous space can normalize blood glucose homeostasis and achieve extensive endocrine differentiation and vascularization. Furthermore, modern imaging techniques such as two-photon excitation microscopy (TPEM) can be employed to monitor transplants through the intact skin in a completely non-invasive manner. Thus, this strategy is a convenient alternative to islet transplantation in diabetic mice, and has the potential to be translated to human clinical applications with appropriate modifications.