Evidence from epidemiological and histopathologic studies in humans with autoimmune type 1 (insulin-dependent) diabetes suggests that beta-cell destruction within the islets of Langerhans progresses through a number of stages. In this review we draw on recent experimental evidence in an attempt to define the molecular pathology of these stages. Stage 1 is postulated to be initiated by modification of the beta cell by virus, chemical or other factors, leading to the production of interferon-alpha, hyperexpression of major histocompatibility complex (MHC) class I molecules and induction of MHC class II molecules. Experiments in transgenic mice suggest that overexpression of MHC molecules is in itself detrimental to beta-cell function. Shedding of antigen(s) from dying beta cells in combination with hyperexpression of MHC molecules may be a powerful immunogenic stimulus. Stage 2 commences with infiltration of the islets by immuno-inflammatory cells (termed insulitis). It is proposed that production of cytokines from the infiltrating cells induces "phenotypic switching" in beta cells, with further upregulation of MHC molecules and the induction of intracellular adhesion molecule-1 expression and interleukin-6 production. Together, these properties are seen as a prerequisite for the presentation of autoantigen by beta cells to adherent T lymphocytes and autoimmune activation. The final stage encompasses autoimmune-mediated destruction of the beta cells by the targeted delivery of cytotoxic cytokines and other mediators.