Treatment with high doses of nicotinamide (niacinamide, vitamin B3) prevents or delays insulin-deficient diabetes in several animal models of type 1 diabetes and protects islet cells against cytotoxic actions in vitro. In recent-onset type 1 diabetes, nicotinamide administration improves beta-cell function, without significantly decreased insulin requirements. This review discusses the possible mechanism of action of nicotinamide in vivo. It is proposed that the key target of nicotinamide is the poly(ADP-ribose)polymerase (PARP), and to a lesser extent (mono)ADP-ribosyl transferases (ADPRTs). Suppression of PARP activity by nicotinamide not only decreases consumption of NAD+, the substrate of PARP, but also has major regulatory effects on gene expression, as shown for the major histocompatibility complex class II gene. In addition, PARP activity controls early steps of apoptosis. The possible suppression of ADPRTs by nicotinamide would also affect CD38, a membrane-bound external ADP-ribosyl transferase with potent immunoregulatory properties. Taken together, it is proposed that high doses of nicotinamide primarily affect ADP-ribosylation reactions in beta-cells as well as in immune cells and the endothelium. As a consequence, cell death pathways and gene expression patterns are modified, leading to improved beta-cell survival and an altered immunoregulatory balance.