Immune-privileged Sertoli cells (SCs) exhibit long-term survival after allotransplantation or xenotransplantation, suggesting they can be used as a vehicle for cell-based gene therapy. Previously, we demonstrated that SCs engineered to secrete insulin by using an adenoviral vector normalized blood glucose levels in diabetic mice. However, the expression of insulin was transient, and the use of immunocompromised mice did not address the question of whether SCs can stably express insulin in immunocompetent animals. Thus, the objective of the current study was to use a lentiviral vector to achieve stable expression of insulin in SCs and test the ability of these cells to survive after allotransplantation. A mouse SC line transduced with a recombinant lentiviral vector containing furin-modified human proinsulin cDNA (MSC-EhI-Zs) maintained stable insulin expression in vitro. Allotransplantation of MSC-EhI-Zs cells into diabetic BALB/c mice demonstrated 88% and 75% graft survival rates at 20 and 50 days post-transplantation, respectively. Transplanted MSC-EhI-Zs cells continued to produce insulin mRNA throughout the study (i.e., 50 days); however, insulin protein was detected only in patches of cells within the grafts. Consistent with low insulin protein detection, there was no significant change in blood glucose levels in the transplant recipients. Nevertheless, MSC-EhI-Zs cells isolated from the grafts continued to express insulin protein in culture. Collectively, this demonstrates that MSC-EhI-Zs cells stably expressed insulin and survived allotransplantation without immunosuppression. This further strengthens the use of SCs as targets for cell-based gene therapy for the treatment of numerous chronic diseases, especially those that require basal protein expression.