Mice that express influenza hemagglutinin under control of the rat insulin promoter (INS-HA) as well as a class II major histocompatibility complex (MHC)-restricted HA-specific transgenic TCR (TCR-HA), develop early insulitis with huge infiltrates, but progress late and irregularly to diabetes. Initially, in these mice, INS-HA modulates the reactivity of antigen-specific lymphocytes, such that outside the pancreas they do not cause lethal shock like their naive counterparts in single transgenic TCR-HA mice, when stimulated with high doses of antigen. Inside the pancreas, the antigen-specific cells do not initially attack the islet cells, and produce some IFN-gamma as well as IL-10 and IL-4. Spontaneous progression to diabetes, which can be accelerated by cyclophosphamide injection, is accompanied by a 10-fold increase in IFN-gamma and a 3-fold decrease in IL-10 and IL-4 production by the locally residing antigen-specific T cells. Also, total islets from non-diabetic mice contain more TNF-alpha, compared with diabetic mice. This scenario is consistent with the view that beta cell destruction depends upon the increased production of certain pro-inflammatory cytokines by infiltrating T cells. Our inability to detect Fas expression on beta cells, but not on lymphoid cells, in diabetic and non-diabetic mice, puts some constraints on the role of Fas in beta cell destruction.