Curative therapy for diabetes mellitus mainly involves pancreas or islet transplantation to recruit insulin-producing cells. This approach is limited, however, because of both the shortage of donor organs and allograft rejection. Intra-bone marrow bone marrow transplantation (IBM-BMT) has recently been shown to be effective in inducing donor-specific tolerance in mice and rats without the use of immunosuppressants. After induction of diabetes in 15 C3H mice with streptozotocin, the mice received both allotransplants of bone marrow cells from C57BL/6 mice by IBM-BMT and injections via the portal vein of insulin-producing cells that were induced in vitro from stem cells derived from adult C57BL/6 bone marrow. We evaluated the expression of these cells by examining the expression of not only insulin but also the crucial transcription factors insulin I and insulin II. The diabetic mice were treated with IBM-BMT and precultured insulin-producing cells. Hyperglycemia was normalized by 5 days after the treatment and remained normal for more than 45 days. This strategy might be applicable to patients with type I diabetes mellitus.