The factors that regulate pancreatic beta cell proliferation are not well defined. In order to explore the role of murine placental lactogen (PL)-I (mPL-I) in islet mass regulation in vivo, we developed transgenic mice in which mPL-I is targeted to the beta cell using the rat insulin II promoter. Rat insulin II-mPL-I mice displayed both fasting and postprandial hypoglycemia (71 and 105 mg/dl, respectively) as compared with normal mice (92 and 129 mg/dl; p < 0.00005 for both). Plasma insulin concentrations were inappropriately elevated, and insulin content in the pancreas was increased 2-fold. Glucose-stimulated insulin secretion by perifused islets was indistinguishable from controls at 7.5, 15, and 20 mm glucose. Beta cell proliferation rates were twice normal (p = 0. 0005). This hyperplasia, together with a 20% increase in beta cell size, resulted in a 2-fold increase in islet mass (p = 0.0005) and a 1.45-fold increase in islet number (p = 0.0012). In mice, murine PL-I is a potent islet mitogen, is capable of increasing islet mass, and is associated with hypoglycemia over the long term. It can be targeted to the beta cell using standard gene targeting techniques. Potential exists for beta cell engineering using this strategy.