Alleviation of hyperglycemia in chemical-induced diabetic mice has been reported after bone marrow transplantation. Nevertheless, the underlying mechanism remains elusive. In the present study, we transplanted genetically labeled primary mouse mesenchymal stem cells into the pancreas of the streptozotocin-treated hyperglycemic isogeneic mice, resulting in a decrease in blood glucose due to a recovery in beta cell mass. Further analysis revealed that the increase in beta cell mass was predominantly attributable to beta cell replication. The grafted mesenchymal stem cells did not transdifferentiate into beta cells themselves but recruited and polarized macrophages in a Stromal cell-derived factor 1-dependent manner, which in turn promoted beta cell replication. Our finding thus suggests that transplantation of autogenic mesenchymal stem cells may increase functional beta cell mass by boosting beta cell replication in diabetes.