The initial events leading to activation of the immune system in type 1 diabetes are still largely unknown. In vivo, dendritic cells (DCs) are thought to be the only antigen-presenting cells (APCs) capable of activating naïve T-cells and are therefore important for the initiation of the autoimmune response. To test the effect of activating islet-associated APCs in situ, we generated transgenic mice expressing CD154 (CD40 ligand) under control of the rat insulin promoter (RIP). RIP-CD154 mice developed both insulitis and diabetes, although with different incidence in independent lines. We show that activated DCs could be detected both in the pancreas and in the draining pancreatic lymph nodes. Furthermore, diabetes development was dependent on the presence of T- and B-cells since recombination-activating gene (RAG)-deficient RIP-CD154 mice did not develop diabetes. Finally, we show that the activation of immune cells was confined to the pancreas because transplantation of nontransgenic islets to diabetic recipients restored normoglycemia. Together, these data suggest that expression of CD154 on the beta-cells can lead to activation of islet-associated APCs that will travel to the lymph nodes and activate the immune system, leading to insulitis and diabetes.