A number of cytokines have been shown to alter the function of pancreatic beta-cells and thus might be involved in the development of type 1 diabetes. Interferon-beta (IFN-beta) expression is induced in epithelial cells by several viruses, and it has been detected in islets of type 1 diabetic patients. Here we show that treatment of isolated mouse islets with this cytokine was able to alter insulin secretion in vitro. To study whether IFN-beta alters beta-cell function in vivo and leads to diabetes, we have developed transgenic mice (C57BL6/SJL) expressing IFN-beta in beta-cells. These mice showed functional alterations in islets and impaired glucose-stimulated insulin secretion. Transgenic animals presented mild hyperglycemia, hypoinsulinemia, hypertriglyceridemia, and altered glucose tolerance test, all features of a prediabetic state. However, they developed overt diabetes, with lymphocytic infiltration of the islets, when treated with low doses of streptozotocin, which did not induce diabetes in control mice. In addition, about 9% of the transgenic mice obtained from the N3 back-cross to outbred albino CD-1 mice spontaneously developed severe hyperglycemia and hypoinsulinemia and showed mononuclear infiltration of the islets. These results suggest that IFN-beta may be involved in the onset of type 1 diabetes when combined with either an additional factor or a susceptible genetic background.