Pouch granuloma formation induced by Freund's complete adjuvant containing0.1% croton oil was studied in both normal and alloxan-induced diabetic mice, and was found to be significatly suppressed in the diabetic group. Insulin repeatedly injected into the pouch facilitated granuloma formation dose-dependently, especially in the diabetic mice. The topical insulin treatment did not affect blood glucose levels. The suppression of granuloma formation by diabetes and its reverse by insulin treatment were verified by histological findings in the granuloma pouch wall. Characteristic changes in neovascularization occurred in the pouch wall. The hydroxyproline content in the granuloma tissue in diabetic mice was not significantly enhanced by the insulin treatment. This indicates that differences in collagen production in normal and diabetic mice were not the critical factor affecting granuloma formation. It was concluded that the decreased granuloma formation in the diabetic state was due to the lack of insulin as a growth factor, and that angiogenesis induced by insulin preceding collagen fiber formation may play an essential role in granuloma formation.