The development of autoimmune diabetes in the nonobese diabetic (NOD) mouse is controlled by at least three recessive loci, including one linked to the MHC. To determine whether any of these genetic loci exert their effects via the immune system, radiation bone marrow chimeras were constructed in which (NOD X B10)F1-irradiated recipients were reconstituted with NOD bone marrow cells. Unmanipulated (NOD X B10)F1 mice, or irradiated F1 mice reconstituted with F1 or B10 bone marrow, did not display insulitis or diabetes. In contrast, insulitis was observed in a majority of the NOD----F1 chimeras and diabetes developed in 21% of the mice. These data demonstrate that expression of the diabetic phenotype in the NOD mouse is dependent on NOD-derived hematopoietic stem cells. Diabetogenic genes in the NOD mouse do not appear to function at the level of the insulin-producing beta cells since NOD----F1 chimeras not only developed insulitis and diabetes but also rejected beta cells within pancreas transplants from newborn B10 mice. These data suggest that the beta cells of the NOD mouse do not express a unique antigenic determinant that is the target of the autoimmune response.