Researchers from Britain's Cambridge University tested the device on 17 children with type 1 diabetes during a series of nights in hospital and found it kept their blood sugar levels within the important "normal" range for 60 percent of the time.
The new system, which involves patients wearing a matchbox-sized monitor and a similar-sized pump with a tube to deliver insulin into the body, also halved the amount of time blood sugar dropped to worrying or dangerous levels, they said.
Medical device makers have been working for years to develop a so-called artificial pancreas to deliver insulin to patients with type 1 diabetes, an autoimmune disease in which the body destroys its own ability to make insulin.
The bodies of type 1 diabetes sufferers become unable to properly break down sugar and if untreated, blood vessels and nerves are destroyed, organs fail and patients die.
"These devices could transform the management of type 1 diabetes, but it is likely to be a gradual process," Roman Hovorka of Cambridge, who led the research, said in a telephone interview.
He said the results were "an important stepping stone" toward bringing an artificial pancreas to the commercial market, but predicted several years yet of refinement before it could be used day and night by patients in normal life.
"It's a bit like with mobile phones. When we started, the technology wasn't very good and the functionality was limited, and it took a number of generations to move to the device that we have now. I see the same thing with this system."
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