Transplantation of pig tissues into humans has the potential for cotransferring pig infections. Knowledge of the epidemiology of pig infections transmissible to humans allows the development of risk limitation strategies at the source herd level, but potentially infectious pig endogenous retrovirus (PERV) is ubiquitous in all domestic pigs and therefore is not avoidable. Using a specific and sensitive RT-PCR and nested PCR for PERV nucleic acids with primers, the screening of pigs from New Zealand herds for the presence and expression of the PERV was conducted. The presence of PERV proviral DNA (pol and env region) and viral RNA was demonstrated in all tested pig tissues including pancreas, liver, spleen, brain, heart, and PBMC. Using the same assays it was established that different tissues (liver, spleen, and heart) of nude and nonobese diabetic (NOD) mice previously transplanted with nonencapsulated pig islets were PERV DNA and RNA negative. Alginate polylysine capsules prepared with encapsulated pig islets were tested for possible leakage of viral particles or viral nucleic acids. RNA was extracted from the supernatant of viable encapsulated pig islet cells grown in culture for 2 months. No evidence of PERV RNA or of cellular nucleic acids could be found. Two adult type I diabetic subjects were transplanted with 1 × 10⁶ neonatal pig islets encased in alginate capsules into the peritoneal cavity. One patient was immunosuppressed. Both showed evidence of graft function (up to 34% reduction in insulin dose, corresponding increase in serum pig C-peptide) for up to 2 years. DNA and RNA were extracted from PBMC and blood plasma of both patients at 19 months posttransplant. No evidence of PERV proviral DNA or RNA could be detected. Piglet islets contain PERV DNA and RNA, but this does not traverse the capsules used or produce any evidence of infection in nude and nonobese diabetic (NOD) mice or humans.