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Subcutaneous implants of device-encapsulated stem cell–derived pancreatic endoderm (PE) can establish a functional beta cell mass (FBM) with metabolic control in immune-compromised mice. In a study with human-induced pluripotent stem cell-PE, this outcome was favored by a preformed pouch which allowed lesion-free insertion of devices in a pre-vascularized site. This was not reproduced in nude rats, known to exhibit a higher innate reactivity than mice and therefore relevant as preclinical model: a dense fibrotic capsule formed around subcutis (SC) implants with virtually no FBM formation. Placement in omentum (OM) of nude rats provided a less fibrous, better vascularized environment than SC. It resulted in less donor cell loss (56% recovery at post-transplant-PT week 3 versus 16% in SC) allowing FBM-formation. At PT week 30, 6/13 OM-recipients exhibited glucose-induced plasma hu-C-peptide to 0.1–0.4 ng/ml, versus 0/8 in SC-recipients. These levels are more than 10-fold lower than in a state of metabolic control. This shortcoming is not caused by inadequate glucose responsiveness of the beta cells but by their insufficient number. The size of the formed beta cell mass (0.4 ± 0.2 µl) was lower than that reported in mice receiving the same cell product subcutaneously; the difference is attributed to a lower expansion of pancreatic progenitor cells and to their lower degree of differentiation to beta cells. This study in the nude rat model demonstrates that OM provides a better environment for formation of beta cells in device-encapsulated PE-implants than SC. It also identified targets for increasing their dose-efficacy.