Several recent studies have suggested that the adult bone marrow harbors cells that can influence beta-cell regeneration in diabetic animals. Other reports, however, have contradicted these findings. To address this issue, we used an animal model of type 1 diabetes in which the disease was induced with streptozotocin in mice. Freshly prepared sex-mismatched bone marrow cells (BMCs) and syngeneic or allogeneic mesenchymal stem cells (MSCs) were concomitantly administrated into sublethally irradiated diabetic mice. Blood glucose and serum insulin concentrations rapidly returned to normal levels, accompanied by efficient tissue regeneration after a single injection of a mixture of 10(6) BMCs per 10(5) MSCs. Neither BMC nor MSC transplantation was effective alone. Successful treatment of diabetic animals was not due to the reconstitution of the damaged islet cells from the transplant, since no donor-derived beta-cells were found in the recovered animals, indicating a graft-initiated endogenous repair process. Moreover, MSC injection caused the disappearance of beta-cell-specific T lymphocytes from diabetic pancreas. Therefore, we suggest that two aspects of this successful treatment regimen operate in parallel and synergistically in our model. First, BMCs and MSCs induce the regeneration of recipient-derived pancreatic insulin-secreting cells. Second, MSCs inhibit T-cell-mediated immune responses against newly formed beta-cells, which, in turn, are able to survive in this altered immunological milieu. Thus, the application of this therapy in human patients suffering from diabetes and/or other tissue destructive autoimmune diseases may be feasible.