The purpose of this study was to evaluate the effects of resident islet macrophage activation on β cell function. Treatment of freshly isolated rat islets with TNF-α and LPS results in a potent inhibition of glucose-stimulated insulin secretion. The inhibitory actions of TNF+ LPS are mediated by the intraislet production and release of IL-1 followed by IL-1-induced inducible nitric oxide synthase (iNOS) expression by β cells. The IL-1R antagonist protein completely prevents TNF+ LPS-induced nitrite production, iNOS expression and the inhibitory effects on glucose-stimulated insulin secretion by rat islets. Resident macrophages appear to be the source of IL-1, as a 7-day culture of rat islets at 24 C (conditions known to deplete islets of lymphoid cells) prevents TNF+ LPS-induced iNOS expression, nitrite production, and the inhibitory effects on insulin secretion. In addition, macrophage depletion also inhibits TNF+ LPS-induced IL-1α and IL-1β mRNA expression in rat islets. Immunocytochemical colocalization of IL-1β with the macrophage-specific marker ED1 was used to provide direct support for resident macrophages as the islet cellular source of IL-1. IL-1β appears to mediate the inhibitory actions of TNF+ LPS on β cell function as TNF+ LPS-induced expression of IL-1β is fourfold higher than IL-1α, and Ab neutralization of IL-1β prevents TNF+ LPS-induced nitrite production by rat islets. These findings support a mechanism by which the activation of resident islet macrophages and the intraislet release of IL-1 may mediate the initial dysfunction and destruction of β cells during the development of autoimmune diabetes.