The Class I gene, H-2Kb, was linked to the rat insulin promoter and the construct inoculated into fertilized mouse eggs to produce lines of transgenic mice. Mice which expressed the Class I molecule in the beta cells of the pancreas developed diabetes and progressive loss of their pancreatic beta cells. This occurred whether the transgene product was syngeneic or allogeneic with respect to its host. No lymphocytic infiltration was ever seen in transgene expressing mice, even in those deliberately immunized with H-2Kb-bearing cells. When the transgene product was allogeneic, spleen cells from the transgenic mice stimulated in vitro with irradiated B10.A(5R) cells (KbDd), could kill H-2d targets in vitro, but not targets bearing H-2Kb. Responsiveness of spleen cells to H-2Kb targets returned with advancing age, as the severity of diabetes increased. The results indicate that diabetes in this model occurs independently of the immune system, and point to an extra-thymic mechanism of tolerance induction dependent on the continuous presence of antigen.