Type 1 diabetes (T1D) is an autoimmune disorder leading to the selective destruction of insulin-producing β-cells in the pancreas. Human embryonic stem cells (hESCs) provide new opportunities for cell replacement therapy of T1D. Therapeutic quantities of human stem cell-derived islets (SC-islets) that contain glucose sensitive β-cells (SC-β), can be generated in vitro following a stepwise differentiation protocol. Yet, preventing immune rejection and recurring autoimmunity of grafted cells, without the use of life-long immunosuppressants, remains a major challenge, and the optimal goal is to transplant ‘naked’ cells that are genetically modified to evade the immune system and induce tolerance. To characterize immunogenicity of SC-islets in inflammatory environments, we performed a droplet based single-cell RNA sequencing (scRNA-seq) of SC-islet cells, under immune attack by allogeneic perihelial blood mononuclear cells (PBMCs) in humanized mouse transplants or in in vitro models. scRNA-seq data analysis identified upregulated genes that contribute to the inflammatory stimulation of T-cells and NK cells. An in vivo whole genome CRISPR screen further detected targets with beneficial effects on SC-islet cell survival under immune attack. Subsequent experiments have shown that genetic perturbation of such genes in SC-islets, can reduce activation of immune cells and increase β-cell survival both in vitro and upon transplantation in humanized animals. These results unfold some insights into the nature of immune destruction of β-cells during allogeneic attack and provide means to prevent both autoimmune and allogeneic rejections of SC-islets, transplanted into patients.