The exact process that leads to the eruption of autoimmune reactions against beta cells and the evolution of diabetes is not fully understood. Macrophages and T cells may launch an initial immune reaction against the pancreatic islets of Langerhans, provoking inflammation and destructive insulitis. The information on the molecular mechanisms of the emergence of beta cell injury is controversial and points to possibly important roles for the perforin-granzyme, Fas-Fas-ligand (FasL) and tumor-necrosis-factor-mediated apoptotic pathways. FasL has several unique features that make it a potentially ideal immunomodulatory tool. Most important, FasL is selectively toxic to cytotoxic T cells and less harmful to regulatory T cells. This review discusses the intrinsic sensitivity of beta cells to FasL-mediated apoptosis, the conditions that underlie this beta cell sensitivity, and the feasibility of using FasL to arrest autoimmunity and prevent islet allograft rejection. In both the autoimmune and transplant settings, it is imperative to progress from the administration of nonspecific immunosuppressive therapy to the concept of beta-cell-specific immunomodulation. FasL evolves as a prime candidate for antigen-specific immunomodulation.