OBJECTIVE: Diabetes associated with autoimmune chronic pancreatitis (ACP) is a subtype of diabetes that is responsive to corticosteroid treatment of progressive endocrine and exocrine dysfunction. However, little is known about pathological changes of islet and exocrine pancreas in ACP. RESEARCH DESIGN AND METHODS: We examined pancreatic specimens obtained on biopsy from four diabetic men with ACP (mean [range]: age 62 years [48-78], duration of ACP 3 months [1-5], duration of diabetes 1 month [0-3]) morphologically, immunohistochemically, and morphometrically. RESULTS: The pancreatic specimens in all cases exhibited inflammatory cell infiltration surrounding ductal cells and extensive fibrosis. Some islets were infiltrated with mononuclear cells with disrupted beta-cells. The subsets of T-cells infiltrated to the islets were mainly CD8(+). Islet beta-cell volume was decreased; the mean percentage area of beta-cells in the islets in four cases with ACP were 16% (range 13-20) (P = 0.0015 vs. type 2 diabetic patients, 48% [27-73], n = 8; P = 0.0002 vs. nondiabetic control subjects, 58% [39-77], n = 7). Preserved ductal cells were surrounded predominantly by CD8(+) or CD4(+) T-cells. Some cytokeratin 19-positive ductal cells contained insulin and glucagon, representing upregulated differentiation of islet cells from ductal cells. Insulin promoter factor-1 (IPF-1) was hyperexpressed in insulin-containing ductal cells. CONCLUSIONS: Diabetes associated with ACP is caused by T-cell-mediated mechanisms primarily involving islet beta-cells as well as pancreatic ductal cells. In ACP, ductal islet precursor cells were associated with IPF-1 hyperexpression, suggesting a critical role of IPF-1 on islet cell differentiation and eventual beta-cell restoration.