Multiple small injections of streptozotocin in mice produce pancreatic insulitis, with progression to nearly complete beta cell destruction and diabetes mellitus. The timing and appearance of the inflammatory islet lesions suggest but do not prove that streptozotocin acts by initiating a cell-mediated immune reaction. Ultrastructural evidence of abundant type C viruses within beta cells of treated mice suggests that streptozotocin may activate murine leukemia virus in vivo in susceptible hosts.