Cell encapsulation represents a promising therapeutic strategy for many hormone-deficient diseases such as type 1 diabetes (T1D). However, adequate oxygenation of the encapsulated cells remains a challenge, especially in the poorly oxygenated subcutaneous site. Here, we present an encapsulation system that generates oxygen (O ) for the cells from their own waste product, carbon dioxide (CO ), in a self-regulated (i.e., "inverse breathing") way. We leveraged a gas-solid (CO -lithium peroxide) reaction that was completely separated from the aqueous cellular environment by a gas permeable membrane. O measurements and imaging validated CO -responsive O release, which improved cell survival in hypoxic conditions. Simulation-guided optimization yielded a device that restored normoglycemia of immunocompetent diabetic mice for over 3 months. Furthermore, functional islets were observed in scaled-up device implants in minipigs retrieved after 2 months. This inverse breathing device provides a potential system to support long-term cell function in the clinically attractive subcutaneous site.