Non-obese diabetic (NOD) mice develop autoimmunity that destroys their native beta cells causing diabetes. Their autoimmunity will also destroy syngeneic transplanted islets and transfer both autoimmunity and diabetes via spleen cells to non-diabetic mice. In this report, we studied the effects of streptozotocin (STZ) on the autoimmune diabetes in NOD mice. We transplanted NOD.SCID islets into three groups of NOD mice: (1) spontaneously diabetic NOD mice (NOD-sp.); (2) prediabetic NOD mice made diabetic by streptozotocin (NOD-stz); and (3) diabetic NOD mice also treated with streptozotocin (NOD-sp./stz). In the first group, the transplants were rejected within 3 weeks. In the second and third groups, the transplants survived indefinitely. Alloxan, a drug similar to streptozotocin, did not have the same effect as streptozotocin. The ability of streptozotocin to prevent diabetes in young NOD mice was reversed by anti-CD8 antibody treatment but not by anti-CD4 treatment. Streptozotocin also made spleen cells from diabetic NOD mice less effective transferring diabetes. These results indicate that streptozotocin treatment both prevents and reverses the islet destructive autoimmunity in NOD mice. We postulate that the effects of streptozotocin treatment may be mediated in part by regulatory T cells.