Background: Islet transplantation with neonatal porcine islets (NPIs) is a promising treatment for type 1 diabetes (T1D), but immune rejection poses a major hurdle for clinical use. Innate immune-derived reactive oxygen species (ROS) synthesis can facilitate islet xenograft destruction and enhance adaptive immune responses. Methods: To suppress ROS-mediated xenograft destruction, we utilized nanothin encapsulation materials composed of multilayers of tannic acid (TA), an antioxidant, and a neutral polymer, poly(N-vinylpyrrolidone) (PVPON). We hypothesized that (PVPON/TA)-encapsulated NPIs will maintain euglycemia and dampen proinflammatory innate immune responses following xenotransplantation. Results: (PVPON/TA)-encapsulated NPIs were viable and glucose-responsive similar to non-encapsulated NPIs. Transplantation of (PVPON/TA)-encapsulated NPIs into hyperglycemic C57BL/6.Rag or NOD.Rag mice restored euglycemia, exhibited glucose tolerance, and maintained islet-specific transcription factor levels similar to non-encapsulated NPIs. Gene expression analysis of (PVPON/TA)-encapsulated grafts post-transplantation displayed reduced proinflammatory Ccl5, Cxcl10, Tnf, and Stat1 while enhancing alternatively activated macrophage Retnla, Arg1, and Stat6 mRNA accumulation compared with controls. Flow cytometry analysis demonstrated significantly reduced innate immune infiltration, MHC-II, co-stimulatory molecule, and TNF expression with concomitant increases in arginase-1+ macrophages and dendritic cells. Similar alterations in immune responses were observed following xenotransplantation into immunocompetent NOD mice. Conclusion: Our data suggest that (PVPON/TA) encapsulation of NPIs is an effective strategy to decrease inflammatory innate immune signals involved in NPI xenograft responses through STAT1/6 modulation without compromising islet function.