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D uring embryonic development, insulin-like growth factor-II (IGF-II) participates in the regulation of islet growth and differentiation. We generated transgenic mice (C57BL6/SJL) expressing IGF-II in β cells under control of the rat Insulin I promoter in order to study the role of islet hyperplasia and hyperinsulinemia in the development of type 2 diabetes. In contrast to islets from control mice, islets from transgenic mice displayed high levels of IGF-II mRNA and protein. Pancreases from transgenic mice showed an increase in β-cell mass (about 3-fold) and in insulin mRNA levels. However, the organization of cells within transgenic islets was disrupted, with glucagon-producing cells randomly distributed throughout the core. We also observed enhanced glucose-stimulated insulin secretion and glucose utilization in islets from transgenic mice. These mice displayed hyperinsulinemia, mild hyperglycemia, and altered glucose and insulin tolerance tests, and about 30% of these animals developed overt diabetes when fed a high-fat diet. Furthermore, transgenic mice obtained from the N1 backcross to C57KsJ mice showed high islet hyperplasia and insulin resistance, but they also developed fatty liver and obesity. These results indicate that local overexpression of IGF-II in islets might lead to type 2 diabetes and that islet hyperplasia and hypersecretion of insulin might occur early in the pathogenesis of this disease.