We have established a model in which cellophane wrapping induces reiteration of the normal ontogeny of beta-cell differentiation from ductal tissue. The secretion of insulin is physiologic and coordinated to the needs of the animal. Streptozotocin-induced diabetes in hamsters can be "cured" at least 1/2 the time. There appears to be activation of growth factor(s) within the pancreas acting in an autocrine, paracrine or juxtacrine manner to induce ductal cell proliferation and differentiation into functioning beta-cells. Given the results of our studies to date, it does not seem premature to envisage new approaches to the treatment of diabetes mellitus. Identification of the factor(s) which regulate islet cell proliferation and differentiation in our model may permit islets to be grown in culture. This concept could be extended to induce endocrine cell differentiation in-vitro as well. Furthermore, islet cell growth factors could be used to provide "trophic support" to islet transplants as a means of maintaining graft viability. There may also be greater scope for gene therapy when the growth factor(s) has been isolated, purified, sequenced and cloned.