In light of accumulating evidence that the endocrine pancreas has regenerative properties and that hematopoietic chimerism can abrogate destruction of beta cells in autoimmune diabetes, we addressed the question of whether recovery of physiologically adequate endogenous insulin regulation could be achieved in the nonobese diabetic (NOD) mice rendered allogeneic chimerae. Allogeneic bone marrow (BM) was transplanted into NOD mice at the preclinical and overtly clinical stages of the disease using lethal and nonlethal doses of radiation for recipient conditioning. Islets of Langerhans, syngeneic to the BM donors, were transplanted under kidney capsules of the overtly diabetic animals to sustain euglycemia for the time span required for recovery of the endogenous pancreas. Nephrectomies of the graft-bearing organs were performed 14 weeks later to confirm the restoration of endogenous insulin regulation. Reparative processes in the pancreata were assessed histologically and immunohistochemically. The level of chimerism in NOD recipients was evaluated by flow cytometric analysis. We have shown that as low as 1% of initial allogeneic chimerism can reverse the diabetogenic processes in islets of Langerhans in prediabetic NOD mice, and that restoration of endogenous beta cell function to physiologically sufficient levels is achievable even if the allogeneic BM transplantation is performed after the clinical onset of diabetes. If the same pattern of islet regeneration were shown in humans, induction of an autoimmunity-free status by establishment of a low level of chimerism, or other alternative means, might become a new therapy for type 1 diabetes.