TGF-βi is a secreted protein and is capable of binding to both extracellular matrix (ECM) and cells. It thus acts as a bifunctional molecule enhancing ECM and cell interactions, a lack of which results in dysfunction of many cell types. In this study, we investigated the role of TGF-βi in the function and survival of islets. Based on DNA microarray followed by quantitative PCR confirmation, TGFβi gene showed drastic increase in expression in islets after culture. We demonstrated that recombinant TGF-βi could preserve the integrity and enhance the function of cultured islets. Such a beneficial effect was mediated via signaling through FAK. Exogenous TGF-βi was capable of sustaining high-level FAK phosphorylation in isolated islets, and FAK knockdown by small interfering RNA in islets resulted in compromised islet function. TGF-βi transgenic (Tg) islets showed better integrity and insulin release after in vitro culture. In vivo, β-cell proliferation was detectable in Tg but not wild-type pancreata. At age above 12 mo, Tg pancreata contained giant islets. Tg mice displayed better glucose tolerance than that of the controls. Tg islets were more potent in lowering blood glucose when transplanted into syngeneic mice with streptozotocin-induced diabetes, and these transplanted islets also underwent regeneration. Our results indicate that TGF-βi is a vital trophic factor promoting islet survival, function, and regeneration. At least some of its beneficial effect was mediated by signaling through FAK.