Reciprocal allogeneic bone marrow transplantations were carried out between diabetes-susceptible nonobese diabetic (NOD) and diabetes-nonsusceptible C57BL/6 or B10.BR/cd mice to examine the role of the immune system and host environment in the development of autoimmune diabetes. Serotyping of lethally irradiated hosts reconstituted with allogeneic bone marrow showed the hematopoietically derived cells to be of donor origin. Our results showed that lethally irradiated NOD mice reconstituted with a B10.BR/cd hematopoietic cell system remained totally free of insulitis, failed to develop diabetes, and thrived to old age. In contrast, lethally irradiated C57BL/6 or B10.BR/cd mice reconstituted with an NOD hematopoietic cell system all developed insulitis, but only ∼10% progressed to overt diabetes. Direct adoptive transfer of insulitis and diabetes by mature T-lymphocytes apparently was not required; analogous results were obtained when diabetes-nonsusceptible hosts were reconstituted with NOD hematopoietic cells containing T-lymphocytes or devoid of Thy-1⁺ cells. The difference in frequency for the development of insulitis versus insulitis plus overt diabetes in C57BL/6 and B10.BR/cd mice suggests that the hematopoietically derived immune cells from NOD mice were sufficient to induce anti-islet reactivity but may require the diabetogenic host environment to develop the frequency and severity of diabetes observed in NOD mice.