Current treatment of diabetes mellitus with insulin injections or pump delivery causes wide swings in blood glucose levels that contribute to complications associated with the disease. There is a tremendous need for a treatment that reproduces the instantaneous response of the normal pancreas to changing glucose levels. Human caveric pancreata are available; people are literally dying along with their islets that could be of life-saving use to diabetic patients. Transplantation of beta islets into non- MHC matched hosts has been limited however, due to the absence of an appropriate method for abrogating host immune rejection of implanted tissue. Immune-privileged tissue may be able to perform this protective function. Immune-privileged cells have been shown to survive allogeneic transplantation and to protect co-implanted tissues, such as beta islet cells. Previous work, demonstrating the use of Sertoli cells may have limited applicability due to difficulties in obtaining large amounts of immune- privileged tissue from that source and due to lack of induction of immune tolerance. We propose to determine the effectiveness of another, more readily available and immunologically useful tissue in abrogation of immune rejection of allogeneically implanted tissue. Phase II would develop co-implantation of immune-privileged cells and beta islets as a treatment modality for diabetes mellitus. PROPOSED COMMERCIAL APPLICATION: The total annual cost of treating the 14 million Americans with diabetes mellitus is approximately $120 billion. Wide swings in blood glucose levels associated with insulin injections or pump-delivery are the basis of severe secondary complications. Implanted beta islet cells protected from immune rejection by immune-privileged cells could produce the instantaneous response of the normal pancreas to changing glucose levels. The market for such implants could be $1 billion a year in the U.S. alone.