Cytokines, released in and around pancreatic islets during insulitis, have been proposed to participate in beta-cell destruction associated with autoimmune diabetes. In this study we have evaluated the hypothesis that local release of the cytokine interleukin 1 (IL-1) by nonendocrine cells of the islet induce the expression of inducible nitric oxide synthase (iNOS) by beta cells which results in the inhibition of beta cell function. Treatment of rat islets with a combination of tumor necrosis factor (TNF) and lipopolysaccharide (LPS), conditions known to activate macrophages, stimulate the expression of iNOS and the formation of nitrite. Although TNF+LPS induce iNOS expression and inhibit insulin secretion by intact islets, this combination does not induce the expression of iNOS by beta or alpha cells purified by fluorescence activated cell sorting (Facs). In contrast, IL-1 beta induces the expression of iNOS and also inhibits insulin secretion by both intact islets and Facs-purified beta cells, whereas TNF+LPS have no inhibitory effects on insulin secretion by purified beta cells. Evidence suggests that TNF+LPS inhibit insulin secretion from islets by stimulating the release of IL-1 which subsequently induces the expression of iNOS by beta cells. The IL-1 receptor antagonist protein completely prevents TNF+LPS-induced inhibition of insulin secretion and attenuates nitrite formation from islets, and neutralization of IL-1 with antisera specific for IL-1 alpha and IL-1 beta attenuates TNF+LPS-induced nitrite formation by islets. Immunohistochemical localization of iNOS and insulin confirm that TNF+LPS induce the expression of iNOS by islet beta cells, and that a small percentage of noninsulin-containing cells also express iNOS. Local release of IL-1 within islets appears to be required for TNF+LPS-induced inhibition of insulin secretion because TNF+LPS do not stimulate nitrite formation from islets physically separated into individual cells. These findings provide the first evidence that a limited number of nonendocrine cells can release sufficient quantities of IL-1 in islets to induce iNOS expression and inhibit the function of the beta cell, which is selectively destroyed during the development of autoimmune diabetes.