Type 1 diabetes (T1D) is an autoimmune disease in which the pancreatic beta-cells are destroyed in an immune-mediated process. In one mouse model of T1D, the co-expression of the costimulatory molecule, B7-1, and the pro-inflammatory cytokine, tumor necrosis factor (TNF)-alpha, on the beta-cells leads to massive insulitis and loss of beta-cells, resulting in T1D. Here, we have investigated whether the specific loss of beta-cells is due to an intrinsic defect in the beta-cells or is a direct consequence of B7-1 expression. We show that transgenic mice expressing TNF-alpha on the beta-cells and B7-1 on the alpha-cells are resistant to the development of diabetes despite B7-1-dependent loss of alpha-cells and a massive islet inflammation consisting of T cells, B cells, macrophages and dendritic cells. Furthermore, islets with alpha-cell expression of B7-1 develop alpha-cell destruction and heavy infiltration, but maintain functional beta-cells when they are engrafted into diabetic mice that co-express TNF-alpha and B7-1 on the beta-cells. Thus, our results show that the beta-cells are able to survive in a severely inflamed organ where the neighboring alpha-cells are destroyed, suggesting that in this model B7-1 expression on the target cells is the primary determinant for the loss of islet cells.