One hour following intravenous streptozotocin, rat pancreases were perfused in situ, and , in contrast to saline-injected controls a marked decrease of insulin secretion was observed. In these streptozotocin-treated animals, baseline glucagon secretion was enhanced when the perfusate glucose concentration was either 80 mg./100 ml. or 300 mg./100 ml. In addition there was hypersecretion of glucagon in response to arginine. Exogenous insulin (20,000 muU./ml.) could suppress glucagon secretion when endogenous secretion was plentiful. Baseline and arginine-stimulated glucagon secretion of the streptozotocin treated animals was not suppressed by large amounts of glucose and insulin to the degree seen in control animals. The glucagon rise in response to an abrupt fall of glucose from 80 mg./100 ml. to 25 mg./100 ml. was not significantly higher in the control group than in the streptozotocin group. The results seen with epinephrine were in sharp contrast to those found with arginine. Epinephrine-stimulated glucagon secretion was not enhanced in the streptozotocin group. In addition, epinephrine-induced secretion could be suppressed by exogenous insulin in both the control and streptozotocin groups. The differences may be secondary to differences of endogenous insulin secretion. The present results are compatible with the hypothesis that local insulin secretion can exert a significant suppressive effect upon the alpha cell and that the inhibition of glucagon secretion by glucose is partially mediated by this mechanism. Furthermore, anomalous local insulin secretion may contribute to the abnormal glucagon secretion of diabetes mellitus.