Following the near-total depletion of pancreatic beta-cells with streptozotocin (STZ), a partial recovery of beta-cell mass (BCM) can occur, in part due to the alpha- to beta-cell transdifferentiation with an intermediary insulin/glucagon bi-hormonal cell phenotype. However, human type 2 diabetes typically involves only a partial reduction in BCM and it is not known if recovery after therapeutic intervention involves islet cell transdifferentiation, or how this varies with age. Here, we used transgenic mouse models to examine if islet cell transdifferentiation contributes to BCM recovery following only a partial depletion of BCM. Cell lineage tracing was employed using Glucagon-Cre/yellow fluorescent protein (YFP) transgenic mice treated with STZ (25 mg/kg—neonates; 70 mg/kg—adults) or vehicle alone on 3 consecutive days. Mice were euthanized 2–30 days later with a prior glucose tolerance test on day 30, and immunofluorescence histology performed on the pancreata. Beta-cell abundance was reduced by 30–40% two days post STZ in both neonates and adults, and subsequently partially recovered in adult but not neonatal mice. Glucose tolerance recovered in adult females, but not in males or neonates. Bi-hormonal cell abundance increased 2–3-fold in STZ-treated mice vs. controls in both neonates and adults, as did transdifferentiated cells expressing insulin and the YFP lineage tag, but not glucagon. Transdifferentiated cell presence was an order of magnitude lower than that of bi-hormonal cells. We conclude that alpha- to beta-cell transdifferentiation occurs in mice following only a moderate depletion in BCM, and that this was accompanied by a partial recovery of BCM in adults.