BackgroundIslet transplantation is used therapeutically in a minority of patients with type 1 diabetes (T1D). However, successful outcomes are hampered by early islet β-cell loss caused by immune rejection and autoimmunity. Recent studies have demonstrated that mesenchymal stromal cells can enhance islet function both in vitro and in vivo by secreting ligands that activate islet G-protein coupled receptors (GPCRs). Stromal cell-derived factor 1 (SDF-1) is an MSC-secreted GPCR ligand, whereas the suppressor of cytokine signaling 3 (SOCS3) is a negative regulator of STAT3-activating cytokines. Here, we determined whether improvement in islet function mediated by exogenous SDF-1 is impaired by SOCS3 in experimental models of T1D.MethodsIsolated islets were cultured for 48 h with SDF-1. Cytokine-induced apoptosis was measured immediately. Islets fromSocs3−/−mice were pre-cultured with exogenous SDF-1 and transplanted underneath the kidney capsule of C57BL/6 mice with streptozotocin-induced diabetes. Blood glucose levels were monitored for 28 days. AMD3100, an antagonist of the SDF-1 ligand CXCR4, was administered subcutaneously to islet transplanted mice to inhibit CXCR4 before and after transplantation.ResultsSDF-1 protected islet cells from cytokine-induced apoptosis in vitro. SOCS3-knockout (KO) islets pretreated with SDF-1 were effective in reducing blood glucose in non-obese diabetic mice in vivo. We found that SDF-1 elicits localized immunosuppression in transplanted SOCS3-KO islets. Immunomodulation was observed when SOCS-KO islets were preconditioned with SDF-1. Gene expression and flow cytometric analyses revealed significantly decreased immune cell infiltration, inflammatory cytokines, and concomitant increases in FOXP3+regulatory T cells, alternatively activated M2 macrophages, and dendritic cell phenotypes. Administration of AMD3100 impaired the SDF-1-mediated improvement in SOCS3-KO islet function and local immune suppression.ConclusionSDF-1 improves the function of islet grafts in autoimmune diabetes through regulation by CXCR4; however, the presence of SOCS3 reverses the protective effect of SDF-1 on islet grafts. These data reveal a molecular pathway that can elicit localized immunosuppression and delay graft destruction in transplanted islets.Supplementary InformationThe online version contains supplementary material available at 10.1186/s13287-023-03347-y.