Porcine neonatal islet-like cell clusters (NICCs) may be an attractive source of insulin-producing tissue for xenotransplantation in type I diabetic patients. We examined the functional and immunohistochemical outcome of the islet grafts in vitro during long-term culture and in vivo after transplantation to athymic nude mice. On average we obtained 29,000 NICCs from each pancreas. In a perifusion system, NICCs responded poorly to a glucose challenge alone, but 10 mmol/L arginine elicited a fourfold increase in insulin secretion and 16.7 mmol/L glucose + 10 mmol/L arginine caused a sevenfold increase in insulin section indicating some sensitivity towards glucose. Hormone content as well as the number of hormone-containing cells increased for the first 14 days of culture. When NICCs were stained for hormones, proliferation (Ki67), and duct cells (CK7), some insulin- and glucagon-positive cells co-stained for proliferation. However no co-staining was observed between insulin- and glucagon-positive cells or between hormone-and CK-positive cells. Following transplantation of 2000 NICCs under the renal capsule of diabetic nude mice, BG levels were normalized within an average of 13 weeks. Oral and IP glucose tolerance tests revealed a normal or even faster clearance of a glucose load compared with normal controls. Immunohistochemical examination of the grafts revealed primarily insulin-positive cells. In summary, in vitro, NICCs responded to a challenge including glucose and arginine. There was a potential for expansion of the beta-cell mass of NICCs in vitro as well as in vivo where NICCs eventually may normalize blood glucose of diabetic mice.