Immunoisolation devices containing therapeutic protein-secreting cells offer potential for long-term therapy without immune suppression. However, scar tissue formation driven by the foreign body response (FBR) hinders nutritional exchange and ultimately leads to graft failure. We previously showed that inhibiting the colony-stimulating factor-1 receptor (CSF1R) pathway in monocytes and macrophages can block the FBR to implanted materials. Here, we demonstrate that coencapsulation of slow-releasing CSF1R inhibitor (GW2580) crystals with human stem cell–derived β cells (SC-β) in alginate spheres enables stable glycemic control for 1 year in immune-competent diabetic C57BL/6 mice. In nonhuman primates (NHPs), GW2580 crystals similarly protected viable, glucose-responsive allogeneic β cells for 1 month without systemic immune suppression. In contrast, the same xenogeneic human SC-β cell formulation that functioned long-term in mice elicited extensive sphere overgrowth and graft failure in NHPs. Serum cytokine profiling and transcriptomic analysis of omental biopsies at day 30 revealed pronounced adaptive immune activation in xenogeneic recipients, including enrichment of CD4
+
T cells, CD19
+
B cells, and antigen-presenting cell programs marked by elevated MHC class II expression. Chemokines
CCL17
,
CCL22
, and
CXCL13
were among the most highly up-regulated transcripts, mirroring responses observed previously with profibrotic alginate formulations without cells. These findings underscore the issues associated with xenogeneic cell sources in higher-order species yet indicate that targeting innate immune pathways with localized CSF1R inhibition may be sufficient to enable function of encapsulated allogeneic cell therapies.