We reported previously that young BioBreeding diabetes-prone (BBdp) rats display increased neogenic extra-islet insulin+ clusters (EICs, <4 insulin+ cells) without an increase in beta-cell mass. Therefore, we investigated the possibility that abnormal islet expansion occurs in BBdp rats before the appearance of islet inflammation. Islet expansion was analyzed in pancreata from 14 to 45 day BBdp and control (BioBreeding control, BBc) rats using immunohistochemistry, morphometry, laser capture microdissection and reverse transcriptase-PCR. mRNA expression for Neurogenin-3, a developmental marker of endocrine progenitors, was three-fold greater in EIC of weanling BBdp and BBc rats compared with islet cells. With increasing age (14-30 days), Neurogenin-3 expression decreased in EIC and increased in islets. In BBdp rats, EIC number and beta-cell proliferation within EIC was greater compared with BBc animals; apoptosis did not differ. The area of small and medium islets in BBdp rats was greater than BBc rats between 14 and 30 days, but this did not result in increased total islet area or beta-cell mass. In addition, the number and area of very large islets was low at 45 days. The frequency of proliferating beta-cells decreased with increasing islet size in BBdp but was constant in BBc rats. Cell cycle analysis of islets revealed more G1 cells and fewer G2 cells in BBdp rats. The ratio of cyclinD2/Cdkn1a, genes that respectively promote or inhibit cell cycle progression, was decreased in BBdp islets. These results suggest that despite increased islet neogenesis, the capacity for islet expansion in diabetes-prone rats is compromised possibly due to decreased proliferative capacity with increasing islet size associated with a partial block at the G1/S cell cycle boundary in islet cells.