To test the hypothesis that c-Myc plays an important role in beta-cell growth and differentiation, we generated transgenic mice overexpressing c-Myc in beta-cells under control of the rat insulin II promoter. F(1) transgenic mice from two founders developed neonatal diabetes (associated with reduced plasma insulin levels) and died of hyperglycemia 3 days after birth. In pancreata of transgenic mice, marked hyperplasia of cells with an altered phenotype and amorphous islet organization was displayed: islet volume was increased threefold versus wild-type littermates. Apoptotic nuclei were increased fourfold in transgenic versus wild-type mice, suggesting an increased turnover of beta-cells. Very few cells immunostained for insulin; pancreatic insulin mRNA and content were markedly reduced. GLUT2 mRNA was decreased, but other beta-cell-associated genes (IAPP [islet amyloid pancreatic polypeptide], PDX-1 [pancreatic and duodenal homeobox-1], and BETA2/NeuroD) were expressed at near-normal levels. Immunostaining for both GLUT2 and Nkx6.1 was mainly cytoplasmic. The defect in beta-cell phenotype in transgenic embryos (embryonic days 17-18) and neonates (days 1-2) was similar and, therefore, was not secondary to overt hyperglycemia. When pancreata were transplanted under the kidney capsules of athymic mice to analyze the long-term effects of c-Myc activation, beta-cell depletion was found, suggesting that, ultimately, apoptosis predominates over proliferation. In conclusion, these studies demonstrate that activation of c-Myc in beta-cells leads to 1) increased proliferation and apoptosis, 2) initial hyperplasia with amorphous islet organization, and 3) selective downregulation of insulin gene expression and the development of overt diabetes.