Pancreatic islet transplantation is a highly promising approach for the treatment of insulin-dependent diabetes mellitus. However, the procedure remains experimental for several reasons, including its low efficiency caused by the early graft loss of transplanted islets. We demonstrate that Gr-1+CD11b+ cells generated by transplantation and their IFN-gamma production triggered by Valpha14 NKT cells are an essential component and a major cause of early graft loss of pancreatic islet transplants. Gr-1+CD11b+ cells from Valpha14 NKT cell-deficient (Jalpha281-/-) mice failed to produce IFN-gamma, resulting in efficient islet graft acceptance. Early graft loss was successfully prevented through the repeated administration of alpha-galactosylceramide, a specific ligand for Valpha14 NKT cells, resulting in dramatically reduced IFN-gamma production by Gr-1+CD11b+ cells, as well as Valpha14 NKT cells. Our study elucidates, for the first time, the crucial role of Gr-1+CD11b+ cells and the IFN-gamma they produce in islet graft rejection and suggests a novel approach to improving transplantation efficiency through the modulation of Valpha14 NKT cell function.