Histopathologic and immunocytochemical alterations in the pancreas of 18 dogs with spontaneous diabetes mellitus were evaluated. In 5 of 18 dogs (28%), extensive pancreatic damage appeared to be responsible for the development of diabetes mellitus. In the other 13 dogs, there was substantial reduction in the number of well-granulated beta cells, but the number of well-granulated alpha and delta cells was normal in 70% and 85% of the dogs, respectively. Also, insulitis lesions composed of infiltrating mononuclear cells, predominantly lymphocytes, were observed in 6 of 13 dogs (46%), but evidence of islet-directed humoral autoimmunity was not detected. Each pancreas had dense Ia (class II antigen) expression on ductal epithelia but not on islet endocrine cells. The importance of the insulitis lesions and class II antigen expression on ductal epithelial cells remains unclear. Of the 18 dogs, 8 received multidonor intrahepatic islet allografts. Allograft rejection was prevented by administration of cyclosporin. Five dogs were administered cyclosporin continuously. One dog with an allograft failed to sustain euglycemia at 231 days after transplantation, and one dog with fasting euglycemia died of pneumonia at 186 days after transplantation. In the other dogs, euglycemia was sustained for periods that ranged from 253 to 716 days.