The optimal treatment of insulin-dependent diabetes mellitus (IDDM), which is caused by the autoimmune destruction of pancreatic islet beta cells, would require the regulated delivery of insulin by transplantation of functional beta cells. beta-cell transplantation has so far been restricted by the scarcity of human islet donors. This shortage would be alleviated by the development of differentiated beta-cell lines, which could provide an abundant and well-characterized source of beta cells for transplantation. Using conditional transformation approaches, our laboratory has generated continuous beta-cell lines from transgenic mice. These cells produce insulin amounts comparable to those of normal islets and release insulin in response to physiological stimuli. Cell replication in these beta cells can be tightly controlled both in culture and in vivo, allowing regulation of cell number and cell differentiation. Another challenge to cell therapy of IDDM is the protection of transplanted cells from immunological rejection and recurring autoimmunity. By employing adenovirus genes which downregulate antigen presentation and increase cell resistance to cytokines, beta-cell transplantation across allogeneic barriers was achieved without immunosuppression. In principle, similar beta-cell lines can be derived from isolated human islets using viral vectors to deliver conditionally regulated transforming and immunomodulatory genes into beta cells. The combination of these approaches with immunoisolation devices holds the promise of a widely available cell therapy for treatment of IDDM in the near future.