Insulin deficiency in type 1 diabetes (T1D) is generally considered a consequence of immune-mediated specific beta-cell loss. Since healthy pancreatic islets consist of~65% beta cells, this would lead to reduced islet size, while the number of islets per pancreas volume (islet density) would not be affected. In this study, we compared the islet density, size, and size distribution in biopsies from subjects with recent-onset or long-standing T1D, with that in matched non-diabetic subjects. The results presented show preserved islet size and islet size distribution, but a marked reduction in islet density in subjects with recent onset T1D compared with non-diabetic subjects. No further reduction in islet density occurred with increased disease duration. Insulin-negative islets in T1D subjects were dominated by glucagon-positive cells that often had lost the alpha-cell transcription factor ARX while instead expressing PDX1, normally only expressed in beta cells within the islets. Based on our findings, we propose that failure to establish a sufficient islet number to reach the beta-cell mass needed to cope with episodes of increased insulin demand contributes to T1D susceptibility. Exhaustion induced by relative lack of beta cells could then potentially drive beta-cell dedifferentiation to alpha-cells, explaining the preserved islet size observed in T1D compared to controls.