Bone marrow‐derived early endothelial progenitor cells (BM‐EPCs) are a clinical tool for enhancing revascularization. However, the therapeutic efficacy of co‐transplantation of BM‐EPC with islets has not been investigated. In this study, marginal mass islets were co‐transplanted with or without BM‐EPCs under the kidney capsules of syngeneic streptozotocin‐induced diabetic mice. Using green fluorescent protein transgenic (GFP‐Tg) mice as BM‐EPC and islet donors or recipients, the role of EPCs in revascularization was assessed for graft morphology, vascular density and fate of EPCs by immunohistochemistry. Islet‐EPC co‐transplantation improved the outcome of islet transplantation as measured by glucose tolerance, serum insulin level and diabetes reversal rate, compared with transplantation of islets alone. Between groups, the morphology of islet grafts showed significant differences in size and composition of grafted endocrine tissues. Significantly more vessel density derived from donors and recipients was detected with islet‐EPC co‐transplantation. Abundant GFP‐Tg mice‐derived BM‐EPCs (GFP‐EPCs) were observed in or around islet grafts and incorporated into CD31‐positive capillaries. Remaining GFP‐EPCs expressed VEGF. In conclusion, co‐transplantation of islets with BM‐EPCs could improve the outcome of marginal mass islet transplantation by promoting revascularization and preserving islet morphology. Co‐transplantation of bone marrow‐derived early endothelial progenitor cells improves islet graft organization and promotes graft revascularization by both a paracrine effect and direct incorporation into vascular endothelial cells.