Islet transplantation stabilizes glycemic control in patients with complicated diabetes mellitus. Rapid functional decline could be due to islet allograft rejection. However, there is no reliable method to assess rejection, and treatment protocols are absent. We aimed to characterize diagnostic features of islet allograft rejection and assess effectiveness of high-dose methylprednisolone treatment. Over a median follow-up of 61.8 months, 22% (9 of 41) of islet transplant recipients experienced 10 suspected rejection episodes (SREs). All first SREs occurred within 18 months after transplantation. Important features were unexplained hyperglycemia (all cases), unexplained C-peptide decrease (ΔC-peptide, 77.1% [-59.1% to -91.6%]; ΔC-peptide:glucose, -76.3% [-49.2% to -90.4%]), predisposing event (5 of 10 cases), and increased immunologic risk (5 of 10 cases). At 6 months post-SRE, patients who received protocolized methylprednisolone (n = 4) had significantly better islet function than untreated patients (n = 4), according to C-peptide (1.39 ± 0.59 vs 0.14 ± 0.19 nmol/L; P = .007), Igls score (good [4 of 4 cases] vs failure [3 of 4 cases] or marginal [1 of 4 cases]; P = .018) and β score (6.0 [6.0-6.0] vs 1.0 [0.0-3.5]; P = .013). SREs are prevalent among islet transplant recipients and are associated with loss of islet graft function. Timely treatment with high-dose methylprednisolone mitigates this loss. Unexplained hyperglycemia, unexpected C-peptide decrease, a predisposing event, and elevated immunologic risk are diagnostic indicators for SRE.