We induced partial beta-cell loss within the pancreas of neonatal rats using streptozotocin (STZ) to better characterize the mechanisms leading to beta-cell regeneration postnatally. Rats were administered either STZ (70 mg/kg) or buffer alone on postnatal d 4, and the endocrine pancreas was examined between 4 and 40 d later. STZ-treated rats showed an approximately 60% loss of existing beta-cells and a moderate hyperglycemia (<15 mm glucose), with levels returning to near-control values after 20 d. Within preexisting islets, there was increased cell proliferation in both insulin- and glucagon-positive cells at 8 d as well as alpha-cell hyperplasia. These were associated with increased pancreatic content and circulating levels of glucagon. Pancreatic levels of glucagon-like polypeptide-1 (GLP-1) were increased 8 d after STZ compared with control values, and the GLP-1/glucagon ratio changed in favor of GLP-1. Administration of a GLP-1 receptor antagonist, GLP-1-(9-39), resulted in decreased recovery of beta-cells after STZ and worse glucose tolerance. Atypical glucagon-positive cells were found within islets that colocalized pancreatic duodenal homeobox-1 or glucose transporter-2. Pancreatic levels of insulin mRNA did not return to control values until 40 d after STZ. Insulin-positive cells were found after 8 d that colocalized glucagon and GLP-1. The model shows that the pancreas of the young rat can rapidly regenerate a loss of beta-cells, and this is associated with hyperplasia of alpha-cells with an altered phenotype of increased GLP-1 synthesis. The target cells of GLP-1 probably include immature beta-cells that coexpress proglucagon.