In this paper the theoretical basis of alloreactivity and its relevance to transplantation biology is discussed prior to a review of work showing that culture of adult mouse pancreatic islets for 7 days in 95% O2 and 5% CO2 facilitates successful grafting to nonimmunosuppressed allogeneic recipients. These allografts function by reversing both chemically induced and spontaneous diabetes. The fetal mouse pancreas is more immunogenic than adult islets, and even after a culture period of 10 days in 95% O2 and 5% CO2, BALB/c allografts are consistently rejected by nonimmunosuppressed recipient mice. The immunogenicity of fetal pancreas is thought to be due to the presence of contaminating lymphoreticular cells in the mesentery surrounding the fetal pancreas. Digestion of the fetal pancreas with collagenase allows the isolation of proislets that develop into functional islet tissue on transplantation. Fetal proislets are less immunogeneic than the whole fetal pancreas and may provide a source of tissue for clinical transplantation. Established islet allografts are relatively stable and are not rejected following nonspecific stimulation of the recipient's immune system or following passive transfer of either antibody or antibody and complement. After prolonged residence in the recipient a state of allograft tolerance develops and such grafts resist rejection by specific stimulation of the recipient. The administration of donor antigen in the form of uv-irradiated cells enforces this state of allograft tolerance.