We have recently reported that Streptozotocin (STZ) diabetic animals operated for partial pancreatectomy (Px) showed normoglycemic status after the operation as compared to uncontrolled hyperglycemia and even death in the diabetic sham operated animals. In order to study the nesidioblastotic factors that initiate pancreatic regeneration in conditions of acute diabetes, we tested the cytosolic extracts from the regenerating pancreas on their ability to cure STZ diabetes in BALB/c mice. BALB/c mice (n = 45) were rendered diabetic with STZ (200 mg/kg body weight) and randomised into two groups so as to receive either cytosolic extract (CE) or saline (diabetic-sham/DS group) for 21 consecutive days. CE treated animals became euglycemic by day 29 and remained normoglycemic during a 190 day follow-up. DS animals remained hyperglycemic with around 70% mortality following sustained uncontrolled hyperglycemia. Islet neogenesis was observed in the CE treated animals and confirmed by increasing circulating insulin concentrations (8.87 +/- 1.07 vs. 41.47 +/- 3.26 microU/ml, mean +/- SEM), islet area (median values 521.5; day 5 to 16481.9 micron2; at 2 months of normoglycemic status) and subsequent decrement in fasting glucose (321.9 +/- 18.00 mg/dl; day 0 to 96.0 +/- 9.02 mg/dl; day 29). Histological analysis of the pancreas in the CE treated group revealed numerous tiny neo-islets as compared to the larger mature islets in the non-diabetic controls. We have shown that factors obtained from the regenerating pancreas carry the potential to initiate islet neogenesis and normoglycemia in the streptozotocin diabetic animals. Our findings could have important clinical implications in the management of diabetes mellitus.