In type I diabetes mellitus, islet transplantation provides a moment-to-moment fine regulation of insulin. Success rates vary widely, however, necessitating suitable methods to monitor islet delivery, engraftment and survival. Here magnetic resonance-trackable magnetocapsules have been used simultaneously to immunoprotect pancreatic beta-cells and to monitor, non-invasively in real-time, hepatic delivery and engraftment by magnetic resonance imaging (MRI). Magnetocapsules were detected as single capsules with an altered magnetic resonance appearance on capsule rupture. Magnetocapsules were functional in vivo because mouse beta-cells restored normal glycemia in streptozotocin-induced diabetic mice and human islets induced sustained C-peptide levels in swine. In this large-animal model, magnetocapsules could be precisely targeted for infusion by using magnetic resonance fluoroscopy, whereas MRI facilitated monitoring of liver engraftment over time. These findings are directly applicable to ongoing improvements in islet cell transplantation for human diabetes, particularly because our magnetocapsules comprise clinically applicable materials.