Viral infection is one environmental factor that has been implicated as a precipitating event that may initiate beta-cell damage during the development of diabetes. This study examines the mechanisms by which the viral replicative intermediate, double-stranded (ds) RNA impairs beta-cell function and induces beta-cell death. The synthetic dsRNA molecule polyinosinic-polycytidylic acid (poly IC) stimulates beta-cell DNA damage and apoptosis without impairing islet secretory function. In contrast, the combination of poly IC and interferon (IFN)-gamma stimulates DNA damage, apoptosis, and necrosis of islet cells, and this damage is associated with the inhibition of glucose-stimulated insulin secretion. Nitric oxide mediates the inhibitory and destructive actions of poly IC + IFN-gamma on insulin secretion and islet cell necrosis. Inhibitors of nitric oxide synthase, aminoguanidine, and N(G)-monomethyl-L-arginine, attenuate poly IC + IFN-gamma-induced DNA damage to levels observed in response to poly IC alone, prevent islet cell necrosis, and prevent the inhibitory actions on glucose-stimulated insulin secretion. N(G)-monomethyl-L-arginine fails to prevent poly IC- and poly IC + IFN-gamma-induced islet cell apoptosis. PKR, the dsRNA-dependent protein kinase that mediates the antiviral response in infected cells, is required for poly IC- and poly IC + IFN-gamma-induced islet cell apoptosis, but not nitric oxide-mediated islet cell necrosis. Alone, poly IC fails to stimulate DNA damage in islets isolated from PKR-deficient mice; however, nitric oxide-dependent DNA damage induced by the combination of poly IC + IFN-gamma is not attenuated by the genetic absence of PKR. These findings indicate that dsRNA stimulates PKR-dependent islet cell apoptosis, an event that is associated with normal islet secretory function. In contrast, poly IC + IFN-gamma-induced inhibition of glucose-stimulated insulin secretion and islet cell necrosis are events that are mediated by islet production of nitric oxide. These findings suggest that at least one IFN-gamma-induced antiviral response (islet cell necrosis) is mediated through a PKR-independent pathway.