Evidence in this paper indicates that insulin can down-regulate the inducible nitric oxide synthase (iNOS) pathway in vivo. The iNOS pathway is up-regulated in diabetes-prone rats and mice and is associated with an autoimmune process. However, the results presented here indicate that macrophage nitric oxide (NO) production and iNOS mRNA expression are also elevated in rats or mice made diabetic by streptozotocin injection in which there is no primary autoimmune component. Insulin administration reduces NO production in autoimmune-prone and streptozotocin-induced diabetic rodents. Finally, insulin decreases macrophage NO production in normal hosts. These results indicate that the autoimmune paradigm is inadequate to explain increased NO in diabetes. As a potential mechanism to explain insulin-mediated regulation of NO production, TGF-1 may be involved because 1) macrophages from diabetic mice produce less TGF-beta1 than macrophages from normal hosts; 2) the circulating TGF-beta1 level is lower in diabetic mice; and 3) insulin administration increases circulating TGF-beta1 in normal mice. Together, these results provide evidence that increased NO in diabetes is not only a cause but also an effect of beta-cell destruction and results in part from a heretofore unrecognized immunomodulatory activity of insulin.