Type 1 diabetes is inhibited in diabetes-prone BioBreeding (BBdp) rats fed a low-antigen hydrolyzed casein (HC) diet. In cereal-fed BBdp rats, islet expansion is defective accompanied by a futile upregulation of islet neogenesis without increased islet mass, due to a subtle blockage in islet cell cycle. We hypothesized that islet growth is enhanced before insulitis in HC-fed young BBdp rats and that islet neogenesis could be stimulated by a trophic factor, islet neogenesis-associated protein (INGAP). beta-Cell homeostasis was analyzed using immunohistochemistry, morphometry, laser capture microdissection and RT-PCR in BBdp rats fed HC or cereal diets. beta-cell proliferation in small and medium islets, and the number and area fraction of medium and large islets were increased in HC-fed animals. In situ islet cell cycle analysis revealed an increased proportion of proliferating S + G2 cells in medium and large islets of 25-45 day HC-fed rats. Expression of the cell cycle inhibitor, p16(INK4a) correlated with islet size and the percentage of p16(INK4a+) beta-cells increased in HC-fed BBdp rats, likely reflecting an increase in large islet area fraction. In HC-fed rats, extra-islet insulin(+) clusters (EIC), insulin(+) duct cells, large islet area fraction, and beta-cell mass were increased. Neurogenin-3 and Pdx-1, markers of beta-cell progenitors, were increased in EIC of weanling HC-fed rats. Daily injection of INGAP (30-45 days) increased the number of small islets, total islets, and insulin(+) cells in small ducts. Thus, in BBdp rats fed a protective HC diet, beta-cell expansion is enhanced through increased beta-cell proliferation and stimulation of islet neogenesis.