Islet transplantation is a promising strategy for effective β-cell replacement in patients with type 1 diabetes. However, its success is hindered significantly by instant blood-mediated inflammatory reaction (IBMIR), which leads to rapid graft loss. IBMIR is triggered when the transplanted islets come in contact with blood, activating the coagulation cascade, complement pathways, and innate immune responses. Tissue factor (TF), abundantly expressed on the islet surface, initiates the coagulation cascade, leading to thrombin formation, platelet activation, and neutrophil infiltration. Plasminogen activator inhibitor-1 (PAI-1) plays a critical role in IBMIR by inhibiting fibrinolysis and causing ischemic injury in the graft. TF and PAI-1 contribute significantly to IBMIR, thus making them critical targets for genetic interventions to prevent IBMIR. In this study, an engineered virus-like particle (eVLP)-mediated Cas9 nuclease is employed to knock out TF and PAI-1 genes in rat islets. TF and PAI-1 expression are effectively downregulated without inducing any off-target effects or without compromising the viability and functionality of the islets. Streptozotocin-induced diabetic mice transplanted with TF- and PAI-1-knockout islets exhibited improved glycemic control and a significant reduction in the plasma levels of thrombin-antithrombin (TAT) complex and complement component 3a (C3a), indicating the successful inhibition of IBMIR post-transplantation.