Patients with type 1 diabetes are identified after the onset of the disease, when β cell destruction is almost complete. β cell regeneration from islet cell precursors might reverse this disease, but factors that can induce β cell neogenesis and replication and prevent a new round of autoimmune destruction remain to be identified. Here we show that expression of IGF-I in β cells of transgenic mice (in both C57BL/6–SJL and CD-1 genetic backgrounds) counteracts cytotoxicity and insulitis after treatment with multiple low doses of streptozotocin (STZ). STZ-treated nontransgenic mice developed high hyperglycemia and hypoinsulinemia, lost body weight, and died. In contrast, STZ-treated C57BL/6–SJL transgenic mice showed mild hyperglycemia for about 1 month, after which they normalized glycemia and survived. After STZ treatment, all CD-1 mice developed high hyperglycemia, hypoinsulinemia, polydipsia, and polyphagia. However, STZ-treated CD-1 transgenic mice gradually normalized all metabolic parameters and survived. β cell mass increased in parallel as a result of neogenesis and β cell replication. Thus, our results indicate that local expression of IGF-I in β cells regenerates pancreatic islets and counteracts type 1 diabetes, suggesting that IGF-I gene transfer to the pancreas might be a suitable therapy for this disease.