Four patients with type 1 diabetes mellitus received segmental pancreatic grafts. The donors were HLA-identical twins in three patients and an HLA-identical sibling in one. Each patient had normal glucose metabolism in the posttransplantation period but impaired graft function developed after 6 to 12 weeks. Complete loss of function developed in three patients. The fourth patient received immunosuppressive therapy but continues to require a low dose of insulin 15 months following transplantation. Pancreatic graft biopsy at the time of declining graft function in three patients revealed a mononuclear cell infiltrate centered upon islets consisting of variable numbers of T11 (pan T), OKT8 (suppressor-killer), OKT9 (transferrin receptor), OKT10 (activated), and HLA-DR-reactive mononuclear cells, as well as 63D3 and OKM1 reactive monocytes. Biopsies obtained following loss of graft function revealed resolution of the inflammatory process and selective destruction of all islet beta-cells in two patients, whereas graft biopsy in one patient demonstrated a mononuclear cell infiltrate in islets containing demonstrable beta-cells but no infiltrate in islets without beta-cells. Following immunosuppressive therapy the fourth patient showed resolution of the insulitis and destruction of beta-cells in 70% of the islets. The variable numbers of beta-cells observed in the remaining islets likely account for the relatively low amount of exogenous insulin required by this patient. There was no immunohistologic evidence of humoral mediated immune reaction in any of the biopsies. It is postulated that selective beta-cell destruction was a consequence of cell-mediated immunity leading to recurrent diabetes mellitus.