Two mouse insulin genes, Ins1 and Ins2, were disrupted and lacZ was inserted at the Ins2 locus by gene targeting. Double nullizygous insulin-deficient pups were growth-retarded. They did not show any glycosuria at birth but soon after suckling developed diabetes mellitus with ketoacidosis and liver steatosis and died within 48 h. Interestingly, insulin deficiency did not preclude pancreas organogenesis and the appearance of the various cell types of the endocrine pancreas. The presence of lacZ expressing β cells and glucagon-positive α cells was demonstrated by cytochemistry and immunocytochemistry. Reverse transcription-coupled PCR analysis showed that somatostatin and pancreatic polypeptide mRNAs were present, although at reduced levels, accounting for the presence also of δ and pancreatic polypeptide cells, respectively. Morphometric analysis revealed enlarged islets of Langherans in the pancreas from insulin-deficient pups, suggesting that insulin might function as a negative regulator of islet cell growth. Whether insulin controls the growth of specific islet cell types and the molecular basis for this action remain to be elucidated.