Regeneration of neonatal beta cells after streptozotocin (STZ)-induced destruction may be due to either replication from pre-existing intra-islet beta cells or extra-islet precursor cells. To further investigate this issue, beta-cell growth was analysed in normal and streptozotocin-treated newborn rats (100 μg/g body weight) at several time points during the first 20 days of life. Beta cells were identified by insulin immunostaining, non-isotopic in situ hybridization for rat preproinsulin mRNA, and electron microscopy. Their proliferative activity was recorded by bromodeoxyuridine-pulse labelling. Beta-cell size and total volume were determined by computerized morphometry. In normal rats, there was a threefold increase in total beta-cell volume during the first 5 days of life, with no further expansion till day 20. The bromodeoxyuridine labelling index of the intraislet beta cells was smaller than that of the extra-islet beta cells (2–3% vs 15–20%). Comparison of the cell birth rate, calculated from the beta-cell labelling index, with the observed increase in beta-cell volume suggested that in normal neonatal rats proliferation of the intra-islet beta-cell population could account for only 10% of the observed expansion. Administration of streptozotocin at birth resulted in more than 90% reduction of the total beta-cell volume at day 2, which then increased to 39% of the normal value by day 20. During this period of partial regeneration, which restored normoglycaemia, the labelling index of intra-islet beta cells was higher than in normal rats (9% vs 2%, p<0.001), whereas no change was seen in the extra-islet beta-cell labelling index. Comparison of cell birth rate with the increase in beta-cell volume indicated that 50–60% of the observed beta-cell growth could result from the intra-islet beta-cell proliferation. These results suggest that replication from pre-existing, surviving beta cells plays an important role in regeneration of neonatal beta cells after destruction by streptozotocin.