Reg (regenerating gene) was isolated as a gene specifically expressed in regenerating islets. We have demonstrated in vitro and in vivo that the exogenous addition of rat and human Reg gene products, Reg/REG proteins, induced beta-cell replication via the Reg receptor and thereby ameliorated experimental diabetes. In the present study, we produced Reg knockout mice by homologous recombination. The Reg gene disruption resulted in a null mutation. Knockout mice developed normally. Islets from the Reg knockout mice appeared morphologically indistinguishable from those of normal controls. However, [(3)H]thymidine incorporation in isolated islets from Reg knockout mice was decreased. When hyperplastic islets were induced by the injection of goldthioglucose, the average islet size in Reg knockout mice was significantly smaller than that of control Reg(+/+) mice. We then produced transgenic mice carrying the Reg gene under the control of the rat insulin II promoter (Ins-Reg) to express Reg in beta-cells. Isolated islets from the Ins-Reg transgenic mice showed increased [(3)H]thymidine incorporation. By intercrossing, we produced NOD mice carrying the Ins-Reg transgene and found that development of diabetes in the resultant Ins-Reg transgenic NOD mice was significantly retarded, coinciding with an increase in the pancreatic beta-cell mass. These results indicate that Reg plays an important role in beta-cell growth/regeneration.