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Islet cell transplantation is a major treatment strategy for type I diabetes, and has proven to be effective for maintaining glucose homeostasis. However, this treatment requires an extended period of immunosuppression to prevent rejection and recurrent transplantation to maintain function. Thus, to enhance the properties of transplanted islet cells, we examined the effect of the co-culture of luteal cells, which secrete progesterone, on islet cell viability, functionality, and revascularization. It was found that islet viability and functionality were higher in the co-cultured group than in single cultures of islets at 48 and 96 h, in parallel with increased progesterone and vascular endothelial growth factor (VEGF) secretion from luteal cells. In the co-culture groups, VEGF levels at 48 and 96 h and CD31 levels at 48 h were significantly higher than those in the islet groups (p < 0.001 and p < 0.05, respectively), and basic fibroblast growth factor (bFGF) levels were increased at 96 h (p < 0.001). Thus, co-culture with luteal cells may increase islet vascularity by enhancing VEGF and bFGF levels for up to 96 h, which could help to markedly increase the pre-transplantation time to allow for effective immunosuppression therapy. This method may also promote islet cell viability and functionality. Progesterone and angiogenic factors secreted from luteal cells may be responsible for these positive effects.